Fund managers are at their most bullish since the pandemic hit in February, according to Bank of America’s monthly survey of global fund managers in August.
The survey found that 46 per cent of fund managers believe there is a bull market, with 79 per cent expecting higher growth, profits, and inflation to come. “We do not think positioning is dangerously bullish,” says Bank of America.
Most managers have low hopes for a V-shaped economic recovery, with most instead expecting the recovery to take a W-shape (37 per cent) or U-shape (31 per cent). The majority expect a Covid-19 vaccine to be announced early in the first quarter of 2021.
Asset allocation is “stubbornly skewed toward US growth stocks”, with most investors calling US tech the most crowded trade, followed closely by gold.
Bank of America also notes that managers are rotating into Europe and EM stocks, banks, small cap, and value stocks, providing “green shoots for inflation assets”.
Main tail risks include a second wave of the pandemic (35 per cent), US-China trade war (19 per cent) and the upcoming US presidential election (14 per cent).