Investors are still bearish but no longer “apocalyptically” so, according to Bank of America’s (BofA) monthly poll of global fund managers in August, as hopes lift inflation and interest rates shocks will stop in the quarters to come.
BofA, which surveyed investors managing $836 billion in assets between August 5 and 11, said on Tuesday they had decreased a net underweight position in equities to negative 26%. That was an uptick on the low of minus 44% last month, a level previously witnessed in the 2008 global financial crisis.
However, fears of economic downturn continue to grow, with 58% of investors expecting a global economic recession in the next 12 months, an increase from 47% in July and the highest since May 2020.
The share of uninvested cash in portfolios fell to 5.7% from 6.1% last month, but stayed “very high”, BofA said.
Stocks have recovered in the last two months after a harsh first half of this year, and BofA said August saw a big rotation into U.S. stocks, consumer shares, and technology, while investors sold out of defensive stocks such as consumer staples, utilities, and UK equities.
Buy Crypto NowU.S. shares climbed about 12% in July, but remain roughly 10% down year-to-date (.SPX). Latest U.S. inflation figures have been higher-than-expected, sparking expectations the Federal Reserve will not raise interest rates as hawkishly as investors previously expected.
Despite the improvement in investor sentiment, BofA said the poll showed its Bull/Bear indicator remained at “max bearish”.
