The September edition of Bank of America’s bellwether Global Fund Manager Survey highlights a growing disconnect between fund managers’ expectations and their positioning: funds remain heavily overweight equities despite increasing pessimism over global economic prospects.
According to the survey, expectations for global growth have tanked to their lowest in nearly 18 months, with only a net 13% of fund managers now looking for the global economy to improve, having peaked at 91% in March. The Delta variant shoulders much of the blame for this deterioration in sentiment.
But, despite their increasingly gloomy outlook, the respondents remain overweight equities (by a net 50%). With rates not predicted to rise before Feb 2023, managers are unwilling to bump up their fixed income exposure given the paltry yields on offer, and cash allocations are barely changed at 4.3% (vs 4.2% in August).