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Equity allocation rises as recession concerns “plummet”

Global_riseAllocations to global equities increased in December, as investor concerns over a recession “plummet” while global growth expectations improved.

The amount of money allocated to global equities “jumped” 10 percentage points to net 31% overweight throughout the month – the highest level in one year – while cash levels remain steady at 4.2%, the same as November.

Bonds allocations continued to tick down and fell to net 48% underweight – the most underweight in over a year, according to Bank of America Merrill Lynch’s monthly fund manager survey.

Recession concerns dropped 33 percentage points. Just under 70% of investors said a recession is unlikely next year.

Growth expectations jumped 22 percentage points, with 29% of the 199 respondents indicating they expect growth to improve over the next year, marking the biggest two-month jump on record for this category.

While 65% of fund managers expect below-trend growth and inflation, 20% said they believe the global economy will experience above-trend growth, which was the highest percentage in the last seven months.

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