Going long on US technology stocks topped was the most crowded trade among global fund managers in August with 59 per cent of those surveyed globally bullish on this asset class. Surprisingly, 31 per cent of fund managers surveyed by
Securities believe gold is overvalued. Among those surveyed, 46 per cent believed equity
are in a bull phase, while a net 79 per cent expect a stronger global economy over the next year.
The survey was conducted from August 7 to 13, 2020. An overall total of 203 panelists with $518 billion worth of assets under management (AUM) participated in the survey. 181 participants with $489 billion AUM responded to the Global FMS questions and 84 participants with $144 billion AUM responded to the Regional FMS questions.
“Asset allocation is stubbornly skewed toward US growth stocks; but August FMS shows 'green shoots' for 'inflation assets'…rotation to Europe and emerging market stocks, banks, small-cap and value stocks. August FMS shows investors
V-shape recovery expectations are low at 17 per cent compared to 37 per cent that expect global economic recovery to be W-shape or U-shape (31 per cent),” BofA
Net 57 per cent of FMS investors, according to BofA Securities, still want companies to improve balance sheets not expand capex. “Inflation expectations have increased 15 percentage points (ppt) in August over July, with net 52 per cent of FMS investors
expecting higher global CPI in the next 12 months,” BofA Securities said.
The dominant concerns of investors
since 2011, according to BofA Securities, have been Eurozone debt & potential breakdown; Chinese growth; populism, quantitative tightening & trade wars; now global coronavirus.
A second wave of Covid-19 dominates the fear quotient with 35 per cent of FMS investors saying it is the top tail risk, followed by US-China trade war, US election and a credit event that can spook global financial markets.