Investors move overweight on cyclical banks: BofA
Banks are the most overweight sector for global investors for the first time since May 2018, according to Bank of America (BofA).
In the firm’s monthly global fund manager survey, it said investors were seeking cyclical exposure in sectors such as financials, commodities, and materials. This was at the expense of allocations to defensive sectors such as utilities and consumer staples.
This led to a net 30% of respondents being overweight to banks, the highest volume since May 2018 and the most popular sector during the month.
BofA described banks as seeing ‘rising optimism’ when it came to investors’ sector positioning while energy was the only cyclical sector which lagged.
In Australia, the big four banks all saw rising share prices over the past year with the best-performing bank being Australia and New Zealand Bank (ANZ) which had risen 77% over the year to 14 April, 2021.
NAB rose 72%, Westpac rose 58% and Commonwealth Bank rose 44%.
Australian equity funds which held a large weighting to ANZ included Maple-Brown Abbott Responsible Investment (7.7%), Legg Mason Martin Currie Select Opportunities (7.5%) and BlackRock iShares S&P ASX 20 ETF (6.9%).
The net overweight to equities had also risen to a near all-time high of 62% of investors, the second-highest figure since February 2011.
However, there was a noticeable decline in allocations to emerging markets which fell to a net 33% overweight. More investors now expected the S&P 500 would outperform emerging markets over the next 12 months.
AUTHOR
Laura Dew
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