BofA Merrill Lynch Fund Manager Survey Finds Investors Significantly Less Confident in Global Economic Outlook
Cash Allocations Rise, Equities Cut Sharply
With increasing concern over China’s growth, investors are significantly less confident in the global economic outlook, according to the BofA Merrill Lynch Fund Manager Survey for January. Allocations to equities have fallen sharply, while cash holdings have risen.
- A net 8 percent of fund managers see the global economy strengthening over the next 12 months – the survey’s lowest reading on this measure since 2012.
- Despite this, just 12 percent believe a global recession will occur in the next 12 months.
- Slowdown in China now stands out as the panel’s biggest “tail risk” by far.
- More respondents now think global profits will decline over the next 12 months than increase, the first negative reading in over three years.
- Over half of respondents expect no more than two Fed hikes in the next 12 months, up from 40 percent a month ago.
- Long U.S. dollar remains the most crowded trade, but bullishness on the currency is waning.
- Average cash balances are up to 5.4 percent, the third-highest reading since 2009. A net 38 percent of investors are now overweight cash.
- Net overweights in equities have halved to a net 21 percent from December’s net 42 percent, while bond underweights have retreated.
- Bearishness towards Global Emerging Markets equities has increased to a record level. Europe and Japan remain the most favored stock markets.
“Investors are not yet ‘max bearish’. They have yet to accept that we are already well into a normal, cyclical recession/bear market,” said Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research.
“Investors’ bullishness towards Europe remains intact, but conviction is rooted to the floor. The positioning gap between the most and least preferred sectors is the lowest in two years,” said James Barty, head of European equity strategy.
Fund Manager Survey
An overall total of 211 panelists with US$610 billion of assets under management participated in the survey from 8 January to 14 January 2016. A total of 173 managers, managing US$499 billion, participated in the global survey. A total of 96 managers, managing US$228 billion, participated in the regional surveys. The survey was conducted by BofA Merrill Lynch Global Research with the help of market research company TNS. Through its international network in more than 50 countries, TNS provides market information services in over 80 countries to national and multi-national organizations. It is ranked as the fourth-largest market information group in the world.
BofA Merrill Lynch Global Research
The BofA Merrill Lynch Global Research franchise covers over 3,400 stocks and almost 1,200 credits, and ranks in the top tier in many external surveys. Most recently, the group was named Top Global Research Firm of 2015 by Institutional Investor magazine; No. 1 in the 2015 Institutional Investor All-America survey; No. 1 in the 2015 Institutional Investor Latin America survey; No. 1 in the Institutional Investor 2015 Emerging EMEA Survey; No. 1 in the 2015 All-Europe Fixed Income survey; No. 2 in the 2015 Institutional Investor All-Asia survey; and No. 2 in the 2015 All-America Fixed Income survey for the fourth consecutive year.
Bank of America
Bank of America is one of the world's leading financial institutions, serving individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 47 million consumer and small business relationships with approximately 4,700 retail financial centers, approximately 16,000 ATMs, and award-winning online banking with approximately 32 million active users and approximately 19 million mobile users. Bank of America is a global leader in wealth management, corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 3 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients through operations in all 50 states, the District of Columbia, the U.S. Virgin Islands, Puerto Rico and more than 35 countries. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.
Bank of America Merrill Lynch is the marketing name for the global banking and global markets businesses of Bank of America Corporation. Lending, derivatives, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., member FDIC. Securities, strategic advisory, and other investment banking activities are performed globally by investment banking affiliates of Bank of America Corporation (“Investment Banking Affiliates”), including, in the United States, Merrill Lynch, Pierce, Fenner & Smith Incorporated, which is a registered broker-dealer and a member of FINRA and SIPC, and, in other jurisdictions, locally registered entities.
Visit the Bank of America newsroom for more Bank of America news.