Investor desire for buybacks, dividends highest in 9 years: BofA Securities

Investor's desire for companies to prioritize returning cash to shareholders via share buybacks, dividends and mergers and acquisitions (M&A) hit the highest level since July 2015, suggests the latest BofA Securities (BofA) survey. Nearly 30 per cent of the respondents surveyed by BofA Securities wanted the companies to do so. SEE CHART

226 panelists with $572 billion worth of assets under management (AUM) participated in the March fund manager survey (FMS), BofA said. While 198 participants with $527 billion worth of AUM responded to the Global FMS questions, 119 participants with $256 billion worth of AUM responded to the Regional FMS questions.

“Macro bullishness drove investors' equity allocation to net 28 per cent overweight (the highest since February 2022), while allocation to cash fell slightly to net 5 per cent overweight (down from 6 per cent overweight earlier). On a relative basis, investors are the most overweight equities versus cash since November 2021,” BofA said.

Investors, BofA said, tapped into emerging market (EM) equities in March at the fastest pace since April 2017, and into eurozone stocks at the fastest pace since June 2020. Global growth expectations among the fund managers surveyed by BofA in March 2024 were at a two-year high, with the 'risk appetite' at the highest level since November 2021.

“There has been a rotation into financials at the expense of US, tech & consumer discretionary (cut by most since May 2015); risk appetite was also expressed via preference for low dividend stocks, which was at the highest level since December 2021. Two-thirds of the respondents said recession was unlikely in the next 12 months; 'soft landing' remained the consensus view at 62 per cent probability,” wrote Michael Hartnett, chief investment strategist at BofA Securities in a coauthored survey findings note with Elyas Galou, Anya Shelekhin and Myung-Jee Jung.

40 per cent of respondents surveyed by BofA (62 per cent in December 2023) now expect bond yields across the globe to head lower in the next 12 months. Inflation, the survey findings suggest, was seen as the biggest tail risk for the markets by 32 per cent of the fund managers surveyed by BofA in its latest survey. CHECK OTHER RISKS

Going long on 'Magnificent 7' (Nvidia, Apple, Microsoft, Amazon, Alphabet (Google), Meta Platforms and Tesla) stocks, according to BofA’s findings, was the most crowded trade among fund managers (58 per cent), followed by shorting China equities (14 per cent), long Japan equities (13 per cent) and long bitcoin (10 per cent). SEE IN DETAIL

45 per cent of the global fund managers believe that artificial intelligence (AI)-related stocks are not in a bubble zone, while 40 per cent think just the opposite, the survey findings suggest.