Investors doubtful over V-shaped recovery

recovery/Bank-of-America/

16 July 2020
| By Laura Dew |
image
image
expand image

The proportion of investors who expect we will see a V-shaped recovery has declined to 14% in favour of a W-shaped one.

According to the monthly Bank of America global fund manager survey, which questioned 210 participants with US$607 billion ($865.96) in assets under management, only 14% expected to see a V-shaped recovery, down from 18% in June.

Expectations of a V-shaped recovery were at a low of 10% in May but had risen to 18% in June as countries eased restrictions. However, it had since fallen back again.

Some 44% said they expected a U-shaped recovery and 30% expected a W-shaped recovery, up from 21% in June.

BoA said the downturn indicated investors’ conviction in strength and duration of the recovery was low.

Earlier this week, former Federal Reserve head Janet Yellen said she expected the recovery would be a ‘Nike swoosh’. This was because, she said, she did not expect the V-shaped recovery to continue as US output was expected to decline between 5%-8% in the next year.

In light of this lower conviction, investors’ cash weightings increased from 4.7% in June to 4.9% as investors were nervous about the “virus, macro and election”. The 10-year cash average was 4.7%.

Cash held in retail funds declined from 5.2% to 4.8% but BoA said this was still an “elevated level” for funds to deploy.

The largest tail risk was a second wave of COVID-19 at 52% followed by concerns about the US election in November 2020. This had been the largest tail wave for the past four months, overtaking concerns about the US/China trade war which had dominated for almost two years.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

2 months 3 weeks ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

2 months 3 weeks ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

4 months 4 weeks ago

ASIC has suspended the Australian Financial Services Licence of a Melbourne-based financial advice firm....

1 week 4 days ago

The corporate regulator has issued infringement notices to three AFSLs whose financial advisers provided personal advice to a retail client while unregistered....

2 weeks 2 days ago

ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test....

3 weeks ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND