A recent fund manager survey by the Bank of America Merrill Lynch has found that a large number of managers are increasingly bearish amidst the trump administrations trade war tariffs, comparing it to the financial crisis of 2009. Over the course of the month of June, it shows that the average fund manager made the move from overweight global equities to those that are underweight. The specific details shared show that over 20% of fund managers are currently sitting underweight, which is the lowest levels seen since March of 2009. That figure equates to a 32 percentage point drop month over month, which is the second largest fall since the creation of the surveys.
Bank of America’s Chief Investment Strategist Michael Hartnett has said “FMS investors have not been this bearish since the Global Financial Crisis, with pessimism driven by trade war and recession concerns, The tactical ‘pain trade’ is higher yields and higher stocks, particularly if the Fed cuts rates on Wednesday.” The survey itself has been utilized as a measurement of current investor sentiment, with a total poll of 179 fund managers who are currently managing over $528 billion in total assets between June the 7th and 13th. Among the key figures what we have seen is that the average capital levels for investors has made a substantial jump to the highest level seen since the 2011 US debt crisis, moving from 4.6% up to 5.6%.
Meanwhile what we are seeing is that fund managers expectations for global growth have been decreasing by the largest amount since November of 1994 during the well-known “tequila crisis’. The majority of fund managers the survey was conducted on commented that the economy is “late cycle” the highest reading recorded. The highest factor that is concerning the fund managers is of course the current state of the trade war, with over 50% of managers citing it as the biggest risk in the markets of recent times. The “trade war” risk has been at the top of investors’ concerns over the course of the last 14 months.
Nathan Chen – Walter International