As Growth Fears Recede, Fund Managers Make Their Biggest U.S. Stock Bets In Eight Years

The steeper yield curve view dropped to its lowest level since February of this year.

According to Bank of America’s latest fund manager survey, global fund managers are overweight to U.S. equities for the first time in eight years as concerns over ebbing growth recede.

In November, U.S. equity allocations jumped 13 points to 29% overweight – the highest reading since August 2013. Investors report being overweight U.S. equities since March 2019, which has continued to be a winning bet.

Fund managers believe emerging market equities EEM, +0.14% will generate the best returns next year by a margin of 34% to 30% over the S&P 500 SPX, +0.39%.

Bitcoin BTCUSD, -0.78% was forecast to be the best asset next year by 12%, followed by oil CL.1, -0.84% and gold GC00, 0.25% at 10% each, and single-digit showings for short- TMUBMUSD03M, 0.047% and long-dated TMUBMUSD30Y, 2.031% Treasury securities

 

 

The outlook for global growth has stabilized. Compared to a net 6% last month, 3% expect improvement this month. 91 percent expect improvement in March. Just 6% of respondents predict a recession in the next 12 months.

Investors soured on inflation plays as energy, industrial, and banks positions declined, while U.S. equities, consumer discretionary, bonds, and tech positions rose. Nevertheless, investors remain overweight inflation assets compared to the average position over the past decade.

Inflation expectations also reflected that benign view, as those expecting a steeper curve fell to the lowest level since February 2019.

The survey covered 388 managers with $1.2 trillion in assets under management, Bank of America said.