Investors are their biggest underweight to U.S. stocks since 2005, according to a Bank of America (BofA) survey of fund managers. Investors are looking for cheaper regional stocks as market sentiment improves, he said.
Respondents in the January survey were “significantly less bearish” than they were in the fourth quarter of last year, with a rotation from pharmaceuticals, tech stocks and US stocks to emerging markets, European stocks and cyclical stocks. , strategists such as Michael Hartnett pointed out.
The allocation to U.S. equities “tumbled sharply” in January 2023, leaving a net underweight of 39%. UK is 15% underweight.
With inflation calming and China’s economy reopening, investors and some prominent strategists are turning positive on global equities. “Buy the world,” Hartnett said earlier this month. European stocks have posted record outperformance against U.S. stocks, and emerging market stocks have outperformed the U.S. S&P 500 index since the beginning of the year.
Source: Bloomberg
Still, fund managers are underweight global equities overall and overweight cash and bonds, citing risks to economic growth. Expectations of lower short-term interest rates are growing as inflation is expected to peak, the survey showed.
For the first time since March 2020, the Fed said monetary policy was too tight. US policy rates were expected to peak at 5% in the second quarter.
Half of respondents expected a slowdown in the year ahead, but the level of bearishness about global growth was the lowest in a year. China’s withdrawal of its zero-corona policy has eased fears of a recession.
The survey was conducted from June 6 to 12, targeting 253 managers with a total of $710 billion (about ¥91.5 trillion) in assets under management.
Original title:BofA Poll Shows Investors Most Underweight US Stocks Since 2005(excerpt)
