Managers make biggest move to bonds in over a decade
The monthly Bank of America Global Fund Manager Survey has found a net 90% of respondents expected inflation would fall in the next 12 months.
Looking specifically at the US, they expected US CPI inflation would be 4.2% in the next 12 months which was down from its current rate of 7.1%.
While high inflation was still the largest tail risk to markets for the sixth consecutive month, it was cited by only 37% of respondents.
Allocations to bonds “surged” during the month, Bank of America said, with investors now at a 10% overweight, the first time they had held an overweight since April 2009. This was up 29 percentage points on November.
Just over a quarter (27%) said they expected government bonds to be the best-performing asset class of 2023, followed by equities at 25% and corporate bonds at 24%.
This allocation to bonds came at the expense of allocation to industrials, cash and energy.
Respondents took their cash levels to 5.9%, down from an ‘uber bearish’ rate of 6.2% in November, as risk sentiment started to ease. The long-term average for cash weightings was 4.8%.
Over 300 global fund managers were surveyed between 2-8 December with US$815 billion in assets under management.
AUTHOR
Laura Dew
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