BofA Merrill Lynch Fund Manager Survey Finds Investors Significantly Less Confident in Global Economic Outlook
January 20 2016 - 7:30AM
Business Wire
Cash Allocations Rise, Equities Cut Sharply
With increasing concern over China’s growth, investors are
significantly less confident in the global economic outlook,
according to the BofA Merrill Lynch Fund Manager Survey for
January. Allocations to equities have fallen sharply, while cash
holdings have risen.
- A net 8 percent of fund managers see
the global economy strengthening over the next 12 months – the
survey’s lowest reading on this measure since 2012.
- Despite this, just 12 percent believe a
global recession will occur in the next 12 months.
- Slowdown in China now stands out as the
panel’s biggest “tail risk” by far.
- More respondents now think global
profits will decline over the next 12 months than increase, the
first negative reading in over three years.
- Over half of respondents expect no more
than two Fed hikes in the next 12 months, up from 40 percent a
month ago.
- Long U.S. dollar remains the most
crowded trade, but bullishness on the currency is waning.
- Average cash balances are up to 5.4
percent, the third-highest reading since 2009. A net 38 percent of
investors are now overweight cash.
- Net overweights in equities have halved
to a net 21 percent from December’s net 42 percent, while bond
underweights have retreated.
- Bearishness towards Global Emerging
Markets equities has increased to a record level. Europe and Japan
remain the most favored stock markets.
“Investors are not yet ‘max bearish’. They have yet to accept
that we are already well into a normal, cyclical recession/bear
market,” said Michael Hartnett, chief investment strategist at BofA
Merrill Lynch Global Research.
“Investors’ bullishness towards Europe remains intact, but
conviction is rooted to the floor. The positioning gap between the
most and least preferred sectors is the lowest in two years,” said
James Barty, head of European equity strategy.
Fund Manager SurveyAn overall total of 211 panelists with US$610
billion of assets under management participated in the survey from
8 January to 14 January 2016. A total of 173 managers, managing
US$499 billion, participated in the global survey. A total of 96
managers, managing US$228 billion, participated in the regional
surveys. The survey was conducted by BofA Merrill Lynch Global
Research with the help of market research company TNS. Through its
international network in more than 50 countries, TNS provides
market information services in over 80 countries to national and
multi-national organizations. It is ranked as the fourth-largest
market information group in the world.
BofA Merrill Lynch Global ResearchThe BofA Merrill Lynch Global
Research franchise covers over 3,400 stocks and almost 1,200
credits, and ranks in the top tier in many external surveys. Most
recently, the group was named Top Global Research Firm of 2015 by
Institutional Investor magazine; No. 1 in the 2015 Institutional
Investor All-America survey; No. 1 in the 2015 Institutional
Investor Latin America survey; No. 1 in the Institutional Investor
2015 Emerging EMEA Survey; No. 1 in the 2015 All-Europe Fixed
Income survey; No. 2 in the 2015 Institutional Investor All-Asia
survey; and No. 2 in the 2015 All-America Fixed Income survey for
the fourth consecutive year.
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