By Steve Goldstein
Fund managers are no longer “apocalyptically bearish,” Bank of America strategists said after their latest poll.
The latest global fund manager survey found a net percent who expect a stronger economy has climbed to negative 67% in August from negative 79% in July. That comes after declines in the percentage that expect higher global CPI and expect higher short-term rates.
Cash levels slipped to 5.7% from 6.1%, though they’re still well above the long-term average of 4.8%. The net underweight in stocks fell to -26% from -44%, and investors moved back into tech and discretionary stocks and out of staples and utilities. For the first time since August 2020, the net percent that think growth stocks will outperform value over the 12 months turned positive.
The changing sentiment comes after the summer rally from the bear-market lows. The S&P 500 /zigman2/quotes/210599714/realtime SPX +2.59% ended Monday at its highest level since May 4, and the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +2.27% has jumped 23% since June 16.
All that said, there was actually an increase in the precentage who expect the global economy to fall into recession in the next 12 months, climbing to 58% from 47%, which is the highest percentage since May 2020.
The most likely source for a systemic credit event is in Chinese and global real estate, where 37% see a possibility, according to the survey. Italian sovereign debt and U.S. leverage loans also were worry spots.
The survey was of managers collectively managing $836 billion in assets under management.