Most institutional asset managers do not anticipate a recession until the second half of 2020 or beyond, an influential survey suggests.
Only 6% of investors in the monthly Bank of America Merrill Lynch (BoAML) ‘Fund manager survey’ expected a global economic recession this year.
However, two-thirds of the investors were bearish on global growth and inflation over the next 12 months. This was the highest level of survey respondents expecting a secular stagnation since October 2016.
Average cash balances remained flat at 4.6% while allocations to global equities jumped 14 percentage points from the previous month to a net 17% overweight, the largest increase since December 2016.
European equity allocation increased eight percentage points to net neutral. Emerging markets remained the most favoured, with net 34% of fund managers overweight.
“[Survey respondents] added a bit of cyclical risk this month but are still firmly positioned for secular stagnation,” said Michael Hartnett, chief investment strategist at BoAML. “They are long assets that outperform when growth and rates fall, like cash, EM and utilities, while short assets that require higher growth and rates, such as equities, the Eurozone and banks.”
The survey had 309 respondents in total.
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