Fund managers maintain ‘uber bearish’ outlook
Global economic sentiment among fund managers has plunged to new lows, with cash holdings at a record high amid stagflation expectations.
According to Bank of America’s (BofA) latest global Fund Manager Survey, 77% of respondents were anticipating a global recession — the highest recording since the height of the COVID-19 pandemic in April 2020.
The survey — which gauged the sentiments of 309 panellists from 4 to 10 November —also reported 92% of investors were expecting the downturn to be characterised by ‘stagflation’ (high inflation combined with deteriorating labour market conditions and subdued market demand).
Given the “uber bearish” outlook, global fund managers were holding cash levels at 6.2%, up from 6.1 per cent in September (the highest recording since 9/11).
Profit expectations also remained low, with 77% of surveyed investors expecting a deterioration — albeit an improvement on the previous month (83%).
A bearish outlook on economic conditions and profitability had influenced chief investment officers (CIOs) to preference balance sheet repair (55%) over capital spending (21%) and buy
backs (17%).
When asked for their outlook on interest rates, respondents said they were expecting the US funds rate to peak at 5% per cent in the second quarter of 2023.
However, this preceded the release of the latest US Bureau of Labor Statistics, which sparked optimism of a slowdown in hikes by the Federal Reserve.
The bureau reported core inflation of 0.3% in October, down from a 0.6% rise in September.
As a result, year-on-year inflation fell below market expectations (7.9%) to 7.7%, down from 8.2% in September — the lowest annual inflation figure since January 2022.
AUTHOR
Charbel Kadib
Recommended for you
Some 42 per cent of CEOs say they are actively reinventing their business to stay relevant in the next decade, with consumer services the most common choice for asset and wealth managers.
Former Ophir Asset Management chief executive, George Chirakis, has joined private equity manager Scarcity Partners, while the asset manager has appointed a replacement from Macquarie.
Australian Unity has appointed a fund manager for its Healthcare Property Trust, joining from Centuria Healthcare, as it restructures the product with a series of senior appointments.
Financial advisers nervous about the liquidity of private markets funds for their retail clients are the target of fund managers launching semi-liquid products which offer greater flexibility and redemptions.
