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Fund managers most bearish on growth since 2011

Bear_marketFund managers have expressed their “worst outlook” for the global economy since December 2011 and pushed up their cash balance, a survey suggests.

The Bank of America Merrill Lynch (BoAML) fund manager survey, which is published each month, found the percentage of fund managers that expect the global economy to slow down in the next year had jumped from 7% in August, to 24% in September.

Consequently, average balances held in cash have increased, suggesting a bearish sentiment to investment returns. Although cash balances climbed just one percentage point from 5% to 5.1% between August and September, BoAML said this level was an 18-month high.

However, although many expect the US economy to slow down, 28% thought growth in Asia and Europe would accelerate

The survey also showed that allocation to emerging markets equities had fallen 9 percentage points to 10% underweight, which was the lowest since March 2016 and a “massive reversal” from 43% overweight in April 2018, BoAML said. Back then, emerging markets was the most favoured region among respondents. 

“Investors are holding on to more cash, telling us they are bearish growth and bullish US decoupling,” said Michael Hartnett, chief investment strategist at the bank. “Fund managers are signalling that they are starting to price in a hawkish Fed.”

The September ‘Global Fund Manager Survey’ had 244 respondents with $742 billion in assets under management.

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