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Lucas
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Title: August 2024 Bank of America Global Fund Manager Survey 1/ In August 2024, investor sentiment took a defensive turn, driven by growing concerns over the global economic outlook. According to the Bank of America Global Fund Manager Survey, which polled 220 participants managing $590 billion in assets, there was a marked shift towards caution, reflected in reduced allocations to equities and increased cash holdings, with sentiment among fund managers falling to a seven-month low.
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Lucas
@lucas79
2/ Only 31% of respondents were overweight in stocks, a significant drop from 51% in July, while cash levels rose to 4.3% of assets under management, up from 4.1% the previous month. This shift was largely attributed to weak U.S. payroll data for July and the volatility shock following the rebound in the Japanese yen.
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Lucas
@lucas79
3/ The survey revealed a sharp decline in global growth expectations, with a net 47% of respondents now anticipating a weaker global economy over the next 12 months, a significant drop from the net 27% in July.
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Lucas
@lucas79
4/ Despite this pessimistic outlook, a substantial 76% of respondents still expect a "soft landing" for the global economy, which refers to a gradual slowdown rather than a severe recession.
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Lucas
@lucas79
5/ This optimism is closely tied to expectations for lower interest rates, as 93% of respondents believe short-term rates will be lower in a year's time, marking the highest level of consensus on this point in the past 24 years.
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Lucas
@lucas79
6/ Additionally, viewing global monetary policy as the most restrictive since October 2008, 60% of those surveyed (up from 31% in July!) anticipate that the U.S. Federal Reserve will implement four or more rate cuts over the next 12 months.
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Lucas
@lucas79
7/ In terms of asset allocation, there has been a noticeable shift toward more defensive positions. Allocation to equities has fallen significantly, with a net 11% of portfolio managers now overweight, down from 33% in July. Conversely, exposure to bonds has increased, with a net 8% of managers now overweight, the highest level since December 2023, marking a significant reversal from a net 9% underweight in the previous month.
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Lucas
@lucas79
8/ The survey also revealed shifts in regional equity allocations. The largest reduction was seen in Japanese equities, which fell to a net 9% underweight from a 7% overweight in July, marking the largest one-month drop since April 2016. US equities also saw a decline, with allocation dropping to a net 11% overweight from 16% in July. In contrast, the Eurozone and global emerging markets saw smaller declines in overweight positions. The survey identified the biggest tail risks as a potential U.S. recession, cited by 39% of respondents, overtaking geopolitical conflict, which was the top concern in the previous month. Other significant risks included higher inflation, systemic credit events, and a potential bubble in artificial intelligence stocks.
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