Global fund managers bought into October correction: BofAML survey

Global fund managers bought into the market correction in October, reveals Bank of America Merrill Lynch’s (BofAML’s) the fund manager survey for November, with their cash levels dropping from 5.1 per cent to 4.7 per cent month-on-month (MoM). 

The cash, according to the survey, was used to buy US and emerging market (EM) stocks, REITs and healthcare scrips. On the other hand, allocation to global technology sector hit its lowest level since February 2009.

An overall total of 225 panellists with $641 billion in assets under management (AUM) participated in the survey. 174 participants with $513 billion in AUM responded to the global fund manager survey (FMS) questions, while 117 participants with $296 billion in AUM responded to the regional FMS questions.

Fund managers expect non-US equities to be the best performing asset class in 2019 with 45 per cent respondents agreeing, followed by S&P 500 (17 per cent). While most fund managers believe that the S&P 500 index still has more room for an upside, nearly 30 per cent now think US stocks have already peaked, as compared to 16 per cent that thought so in October.

“Investors forecast S&P500 peak of 3,056 (currently at 2,071 levels), waiting for 3.7 per cent on 10-year Treasury yield before rotating from stocks into bonds,” the BofAML survey says.

On the other hand, corporate bonds (25 per cent) and government bonds (24 per cent) are likely to be the worst performing asset class in 2019, survey findings suggest.

44 per cent of investors expect global growth to decelerate in the next 12 months, the worst outlook on the global economy since November 2008, while 54% think Chinese growth will slow in 2019, the most bearish outlook since September 2016, the survey reveals.