BofA fund manager survey least bullish since Oct 2020, cash at 12-mth high

Finds investors are increasingly worried about global growth expectations, stagflation and China

The latest Bank of America (BofA) survey of fund managers found investors are increasingly worried about global growth expectations, stagflation and China.

The survey was the least bullish since October 2020 with cash levels jumping to a 12-month high and growth expectations weakest since April 2020. The survey, however, showed that the allocations to stock still remain very high.

A net six per cent (percentage of respondents expecting the economy to weaken minus percentage of those expecting it to strengthen) expect global growth to weaken over the 12-months. Meanwhile, 15 per cent say profit growth will slow—worst margin outlook worst since May 20.

The predictions of "boom" dropped to 61 per cent, while that of "stagflation" rose 34 per cent, said BofA in a release.

About 85 per cent surveyed expect higher short-term rates and pencil one Fed rate hike in for 2022 (earlier the it was expected in Feb 2023);

The survey showed a net 28 per cent increased allocation to commodities, while allocation to stocks remained high at 50 per cent.

The survey showed big rotation to banks and energy from healthcare and staples.

Banks were the most-preferred sector globally (highest overweight since May 18),.

The biggest risks were inflation (48 per cent respondent), China (23 per cent) and Covid (3 per cent).

Short China was the most-crowded trade, the survey showed.