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Investor Alert

The Tell

July 14, 2020, 7:09 a.m. EDT

This is the most crowded trade ever, fund managers say

Fund managers says the technology trade has never been more crowded. But that hasn’t kept them from also betting big on the sector.

Bank of America’s monthly fund manager survey finds 74% say long U.S. tech stocks is the most “crowded trade.” That is the highest reading since the question started being asked in Dec. 2013.

Crowded or not, they are still overweight the tech sector, along with the pharmaceutical sector. The tech-heavy Nasdaq Composite (AMERICAN:COMP) has seen 27 record finishes this year.

What could unwind the tech trade? A coronavirus vaccine, say the fund managers.

Related : Big Tech’s latest reckoning is coming as it continues to rack up record valuations

The survey also finds cash levels rose to 4.9% from 4.7%. That caution shows up elsewhere — just 14% say the economic recovery will be “V”-shaped versus 44% expecting a “U,” and 30% a “W” shaped recovery. In addition, 62% of investors want companies to improve balance sheets, versus just 27% wanting higher capital expenditure, and only 9% calling for higher dividends and stock buybacks.

The survey also found the allocation to commodities now at the highest since July 2011, and that there was a big jump in European equity exposure. European leaders are due to meet this week to discuss the €750 billion European Union rescue fund proposal.

Bank of America’s strategists are expecting a choppy summer, and they say to buy when the S&P 500 (S&P:SPX) is below 2,950 and sell when it is above 3,250. The S&P 500 ended Monday at 3155.22.

The survey, conducted between July 2 and 9, was of 210 participants managing $607 billion in assets.

Link to MarketWatch's Slice.