US equity allocations ‘surge’ to 11-year high
Global fund managers are the most overweight to US equities since August 2013 on the back of the election of Donald Trump as US president-elect.
According to the monthly Global Fund Manager Survey from Bank of America, which surveyed 213 panellists with US$565 billion in assets under management, respondents were more optimistic after the US election.
Interestingly in this month’s results, 22 per cent of respondents provided their answers following the election results of Donald Trump as the next president-elect on 6 November, Bank of America said, which created a differing set of answers.
Of those who submitted responses after the election, they were more optimistic on global and US growth, held lower cash levels and higher allocations to US equities.
“Post-election results show higher global and US growth expectations, higher inflation expectations, lower probability of a ‘soft landing’, lower cash levels, higher allocations to US and Japanese equities, higher tech weighting, and big expectation for small caps and high yield bonds to outperform.”
Global growth expectations post-election jumped from -10 per cent in October to 23 per cent, the highest since July 2021, while US growth expectations jumped from -22 per cent to 28 per cent.
Cash levels, which rose briefly as a defensive move pre-election, were at 4 per cent.
Allocations to US equities “surged” post election, the firm said, to the highest level since August 2013, with investors holding 29 per cent in the asset compared to 10 per cent in October.
Some 43 per cent said they expect US equities to be the best-performing asset class in 2024 compared to 27 per cent of respondents pre-election. There was less positivity towards global equities post-election, which stood at 20 per cent compared to 27 per cent of pre-election respondents.
Looking at the overall monthly survey results, which included both pre- and post-election responses, it said equity allocations were a net 34 per cent overweight, up 3 percentage points. Fixed income allocations were a net 10 per cent underweight and cash rose slightly from 3.9 to 4.3 per cent.
Overall global sentiment was 5.2, down from 5.5 in October. This measure is based on cash levels, equity allocations and economic growth expectations. However, if looking at only responses following the election, it would have risen from 5.5 to 5.9.
AUTHOR
Laura Dew
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