Bank of America's April Global Fund Manager Survey (FMS) results show that investors are most bearish since December last year.
FMS sentiment fell in April as investors moved away from equities. A net 29% of survey respondents are Underweight equities, down from 31% in March. Similarly, the growth expectations worsened to December 22 levels with a net 63% expecting weaker global growth.
35% said the Fed will start cutting rates in Q1 2024 while 28% expect this process to start a quarter earlier.
Other key takeaways from the survey include:
- Net 84% say global CPI heading lower;
- Net 58% predict lower short-term rates, the most since Nov’08;
- The biggest 'tail risks' are bank credit crunch & global recession (35%) and high inflation that keeps central banks hawkish (34%);
- Cash allocation has remained above the 5.0% tactical "buy" signal since Nov'21;
- Fear of credit crunch drives bond allocation up 9ppt MoM to net 10% OW, the largest overweight since Mar'09;
- Investors’ underweight in equities relative to bonds is now also at levels not seen since the GFC;
- Net 6% view gold as overvalued; and