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
A leading consultancy believes asset managers will be reluctant to expand overseas in 2025 as high distribution costs blow out potential benefits, but this is providing tailwinds for Australian third-party distributors.
Three of the largest ETF providers reported net inflow increases of more than 100 per cent during 2024, as Betashares admits it “underestimated” the scale of annual inflows the industry would see.
As Magellan Financial Group continues its search for a permanent chief financial officer, it has looked internally for an interim replacement.
Bennelong Funds Management has announced its first responsible entity service client, having flagged it as a 2025 priority for the firm.
