Investors’ feeling about economic perspectives is the most negative in three decades, but the pessimism of fund managers is not fully reflected in their asset allocation, which can mean more losses to US actions, according to a Bank of America survey.
Background managers are extremely pessimistic, with 82% of respondents in Bofa’s monthly survey hoping the global economy weaken. Consequently, a record number aims to reduce exposure to US stocks, according to the survey.
Background managers are “extremely pessimistic about macro, but not just so pessimistic about the market,” wrote the strategists led by Michael Hartnet. The “peak of fear” is not yet reflected in cash allocations, which currently represent 4.8% of assets and would usually need to rise to 6%, they added.
High uncertainty around US commercial policy and an increase in financial market volatility has bothered investors in stocks. Respondents are 36% underweight in US stocks in April, a drop from 17% overweight in February, the largest two -month drop ever recorded.
US actions performed lower this year, amidst the concern that President Donald Trump’s trade war will hinder growth, with 42% of respondents stating that a recession is likely in the world’s largest economy.
The S&P 500 recovered from the least this month, but its 8.1% drop in the year is lower than European and Chinese benchmarks. Bofa strategists expect April minimums to stay in the short term and warned that “large highs need large tariff reliefs, great cuts in Fed rates and/or resilience in economic data.”
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There were 164 participants with US $ 386 billion in assets under management in the global survey conducted from April 4 to 10.
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