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Money managers remain bearish as only 10% expect V-shape recovery: BofA

Cash levels remain elevated at 5.7% compared to a 10-year average of 4.7%

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Bank of America | portfolio management services

BS Reporter  |  Mumbai 

Mutual funds, Stock markets, liquidity
Fund managers are favouring fixed-income more with bond allocation rising to highest level since July 2009, the survey revealed.

Investor sentiment continues to remain bearish with only 10 per cent money managers expecting a V-shaped recovery, according to a survey conducted by (BoFA).

“Zeitgeist bearish: just 10 per cent expect a V-shaped recovery, 25 per cent a new bull market; in contrast 75 per cent expect a U or W-shaped recovery, 68 per cent a bear market rally,” the investment bank said.

Meanwhile, cash levels remained elevated at 5.7 per cent compared to 10-year average of 4.7 per cent.

According to the survey, the biggest tail risk for the market is a second wave of the pandemic. A total of 223 panelists managing $650 billion in assets were surveyed by BofA between May 7 and May 14.

Fund managers say a vaccine breakthrough could be catalyst for the V-shaped recovery.

Nearly three-fourth of the fund managers believe companies should reduce debt, 15 per cent said they should increase capex and 7 per cent said companies return cash to shareholders

Fund managers are favouring fixed-income more with bond allocation rising to highest level since July 2009, the survey revealed.

The most-crowded trade was US tech and growth stocks. Meanwhile, fund managers were short on emerging market for first time since September 2018 and were record long on the healthcare sector.

First Published: Tue, May 19 2020. 16:32 IST
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