BofA Merrill Lynch survey: The bulls are back as investors feel the FOMO
The bulls are back, according to a closely-followed investor survey showing a wave of renewed optimism over the health of the world economy.
A “fear of missing out” and fading recession concerns have prompted bullish fund managers to move away from cash and back into stocks in their masses.
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Investor outlook has picked up sharply in BofA Merrill Lynch’s November poll, with cash levels plunging at the fastest monthly rate since President Donald Trump was elected.
Cash levels fell to 4.2 per cent from five per cent during the previous month.
A net six per cent of respondents also expect there to be a stronger global economy in the next year, marking the biggest month-on-month jump on record.
“The bulls are back,” said Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research.
He added: “Investors are experiencing FOMO – the fear of missing out – which has prompted a wave of optimism and jump in exposure to equities and cyclicals.”
Hopes of an end to the US-China tariff deadlock and an orderly Brexit transition have driven the rise in growth expectations over the last month, helping to ease market jitters that mounted over the summer.
Optimism over a trade deal between Beijing and Washington has helped push US stock markets to record highs in recent weeks, with the Dow and S&P 500 both enjoying new gains.
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The survey of investors, who manage more than $500bn (£389bn) in assets, found that the trade war still remained the top concern (39 per cent), followed by a bond market bubble (16 per cent) and monetary policy impotence (12 per cent).
Long US tech & growth stocks (30 per cent) topped the list of the most crowded trades identified by fund managers, ahead of Long US Treasuries (21 per cent) and Long IG corporate bonds (20 per cent).