Fund managers more bullish but swerve US stocks


The latest Bank of America fund manager survey has found cash has declined to 5.3% while recession fears at a six-month low.
This weighting was down from a 22-year high of 6.2% in November but was still overweight as the long-term average for cash weightings was 4.8%
“Investors are still running cash levels but the combination of peak rates plus peak recession fears is causing asset allocation to fall,” it said.
Managers were overweight bonds but underweight global and US equities with overall equity allocations falling to a net 33% underweight, down from 22% in December.
US equities were at an 18-year low of 39% underweight in January, in light of poor performance by US mega-caps such as Tesla, Meta and Amazon. Over one year to 18 January, Tesla was down 61%, Meta was down 57% and Amazon was down 40%
“The magnitude of the month on month increase in net underweight is very impressive…January 2023 saw the biggest month on month increase in net underweight on US equities on record,” BoA said.
Respondents also felt the monetary policy tightening was “too restrictive” for the first time since March 2020 at the start of the COVID-19 pandemic. Central banks remaining hawkish was the third-biggest tail risk for respondents, behind high inflation and a deep global recession.
“Investors are telling central banks their tightening cycle has worked too well and now is the time to stop.
“As with recession fear, asset prices have inflected higher whenever monetary policy was seen as restrictive in the past 20 years.”
Some 42% respondents now expected rates to continue to rise, but this was down more than three-quarters of fund managers in September.
Over 280 global fund managers were surveyed between 6-12 January with US$772 billion in assets under management.
Recommended for you
Australian equity ETFs attracted record inflows of $3.2 billion in 1Q25, while heightened volatility led to a decline in flows for global equity ETFs, according to Vanguard.
The failure of a clinical trial by biotech firm Opthea has caused shares in its backer Regal Partners to decline 52 per cent year-to-date and hit its funds under management, quarterly flows show.
GQG Partners has revealed its quarterly flows for the first three months of 2025 were up 5.8 per cent, after a difficult final quarter of 2024 as a result of institutional redemptions.
Global asset manager Janus Henderson has signed a strategic partnership with life insurer Guardian Life, which will commit US$400 million to accelerate the firm’s fixed income development plans.