Why fund managers are the most bullish in two years
Bank of America’s latest Global Fund Manager Survey reveals that the professionals are the most optimistic they’ve been for two years. Kyle Caldwell explains why.
14th February 2024 12:48
by Kyle Caldwell from interactive investor
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Fund managers are the most bullish they’ve been in two years amid expectations that macroeconomic storms have passed.
For the first time since April 2022, professional investors are no longer predicting a recession. They have become the most optimistic on global growth since February 2022, and nine in 10 expect interest rate cuts to happen soon. More than three-quarters of those polled also think the battle with inflation has been won and expect price rises to continue cooling.
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When asked about expectations for the global economy, only 11% of fund managers said they expect a recession or “hard landing”, while two-thirds expect a “soft landing” and a fifth see “no landing”.
The findings are from the closely watched monthly Bank of America Global Fund Manager Survey, which polled 249 panellists with $656 billion in assets under management.
The increased optimism has led to a decline in cash weightings over the past month, from 4.8% to 4.2%. This money is being put to work in global and US stocks, both of which are at around two-year highs in terms of amounts allocated.
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US technology company allocation rose to its highest level since August 2020, reflecting that the pros are expecting plenty more to come from the artificial intelligence (AI) theme.
This was further demonstrated by the Magnificent Seven tech companies being the most-crowded trade for the fourth consecutive month, followed by being “short” (betting against) Chinese shares, and investing in Japanese companies.
When quizzed on the biggest tail risks threatening to blow stock markets off course, higher inflation came out on top (27%), followed by geopolitics (24%) and a systemic credit event (16%).
Our recent poll of interactive investor customers also found the tech sector is the key area of focus in the run-up to tax-year end, while our weekly look at where ISA investors are putting their money shows strong appetite for funds and investment trusts investing in tech companies, including L&G Global Technology Index, Polar Capital Technology (LSE:PCT) and Scottish Mortgage (LSE:SMT).
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