(Bloomberg) – It took unusual incentives and a rally that shook stocks in the vicinity of record highs, but fund managers overseeing $ 489 billion finally believe this stock market recovery has stalled.
Among investors surveyed by Bank of America Corp. in the week through August 13, 46% described stocks as in a bull market, up from 40% in July. The share of skeptics who say it is a “bear market rally” has dropped to 35% from 47% a month earlier. There are more signs of optimism: 79% of investors expect a stronger economy, the worst result since December 2009, while 57% are betting on higher profits.
The survey comes at a crucial moment for stock market investors, as the S&P 500 is flirting with record highs and many participants are mumbling whether it’s time to make a profit or carry more returns. BofA strategists said that although this is the most volatile monthly survey for fund managers since February, it is not yet a red flag.
“We do not think position is dangerously Bullish,” said strategists led by Michael Hartnett. September is expected to bring market volatility to bear on concerns that U.S. stimulus peaks, but a “touching drop” in credit and equities would necessitate a “disorderly” rate hike, according to BofA.
On top of the vigorous stimulus measures, expectations of a Covid-19 vaccine have added to forces that shares have been rising higher in recent weeks. The latest BofA survey shows that fund managers expect an announcement of faxes to happen in the first quarter of 2021.
To be sure, not all investors’ expectations are rosy. Only 17% predicted a rapid, V-shaped economic bounce, compared to 37% who expected a W-shaped recovery to come in phases.
The August survey also showed a rotation to euro area stocks and emerging markets compared to July. The euro area is now the most popular action region among respondents to the poll, with its allocation increasing 17 percentage points to an overweight of 33%, the highest since May 2018. In contrast, exposure to US equities fell 5 percentage points to net 16% overweight.
Other highlights of the survey include:
Cash allocation fell 6 percentage points to net 26% overweight versus JulyNet 57% of polled investors want companies to improve balance sheets instead of expanding capexInvestors see an equivalent portfolio of equities, bonds and gold as the most valued since 2008Net 31% believe gold is too rated at 0% in July, the highest level since 2011Top dump risk is a second wave of Covid-19, followed by a trade war between the US and China and the US election. shares remain the top region underweight
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