Fund managers most bearish since Jan on growth uncertainties

Mumbai: Bank of America (BofA) Securities' global fund manager survey for April showed that investors were 'most bearish' during this month in this calendar year so far. The credit crunch has caused a double dip in global growth, prompting investors to lower their allocation down by 200 basis points (bps) to net 29% under-weight on equities, said the brokerage's fund manager survey of 286 participants who collectively managed $728 billion in assets between April 6 and April 13.

The survey showed a net 63% of investors expect a weaker economy - the most pessimistic since December 2022. This has also led to the highest allocation to bond markets, which has seen a 9 percentage points month-on-month to a net 10% under-weight - the highest since March 2009.

"Investors' underweight in equities relative to bonds is now also at levels not seen since the GFC," it said.

Interestingly, the survey found its bull-bear indicator at 2.3, which translates into a neutral reading and supportive of risk assets.

The average cash balance available with fund managers stood unchanged at 5.5% in April. Interestingly, cash allocation has remained above the 5% tactical buy signal since November 2021, when the US Federal Reserve began to taper its bond purchases and pull back on pandemic stimulus.

Cash levels [at 5%] for 17 consecutive months; this length of time is eclipsed only by the 32-month DotCom bear market, said BofA According to the survey, 30% of the respondents believe the bullish position on US big tech stocks is the most crowded trade now followed by bearish trades in US banks (18%), while bullish China equities trades has slipped to the third position among the most crowded trade from the first in February 2023.