Global fund managers fear inflation more than covid-19; remain bullish on growth expectations

With US equities reaching contemporary highs repeatedly, fund managers proceed to again the S&P 500.
(Picture: REUTERS)

Fund managers throughout the globe are over the concern covid-19 pandemic, in accordance with Financial institution of America’s (BofA) current fund supervisor survey. Among the many 194 fund managers surveyed by the worldwide funding financial institution, as many as 35% of the respondents imagine inflation is now once more the largest threat for markets. In the meantime, solely 9% imagine covid-19 to be the largest tail threat for buyers. Though inflation is seen as a threat, 69% of the respondents proceed to stay bullish and anticipate an above-trend progress accompanying their expectation of above-trend inflation. 

The bullish bias of fund managers is mirrored nicely within the low money ranges they’ve been sitting on. BofA confirmed that money ranges are as little as 4.1%, implying that a lot of the investable cash out there has been invested. On-month foundation, buyers have moved in direction of late cyclicals reminiscent of power. Stapes, REITs, banks, utilities, and supplies have additionally seen a constructive change when it comes to investor positioning, in accordance with the survey. Then again, Rising markets, expertise, and commodities have seen a destructive development. Allocation in direction of the expertise sector is the third-lowest since 2006.

With US equities reaching contemporary highs repeatedly, fund managers proceed to again the S&P 500. 29% of the respondents imagine S&P500 will outperform in 2021, down barely from the earlier month. In the meantime, for bond yields, fund managers are of the view that when yields close to 2%, inventory markets might witness a correction.

Additional, the survey confirmed that fund managers have aligned their portfolios in direction of shares with high-quality earnings and people with high-quality dividends. Smallcaps appear to be dropping their shine, with solely 14% favouring them in Could, as towards 35% in March this yr. In the meantime, worth continued to stay probably the most favoured commerce. “48% of FMS buyers suppose worth will outperform progress within the subsequent 12 months. It continues to be probably the most favoured issue within the final 6 months aside from small-cap in February 2021,” BofA mentioned. 

Catching up on the current euphoria round cryptocurrencies, as many as 43% of the fund managers mentioned that ‘Lengthy Bitcoin’ has overtaken ‘Lengthy Tech’ as probably the most crowded commerce. Nonetheless, for the reason that survey, Bitcoin has tumbled at the very least 18%. Know-how has moved to the second spot, adopted by Lengthy ESG, after which brief US treasuries.