Fund managers pile into cash as outlook for growth plunges to all time low
Fund managers are fleeing equities and piling into cash as the outlook for global growth plunges to an all time low, according to a closely watched survey.
Investors’ cash balances hit 6.1 per cent in early May, the highest level since September 2001, while equities are at their most underweight since May 2020, according to a survey of fund managers representing $872bn funds under management, conducted by the Bank of America.
The results showed an “extremely bearish” sentiment among top investors, analysts said, with survey respondents seeing hawkish central banks as the biggest risk to growth, followed by the possibility of recession.
Analysts at the BofA noted that investors have shunned riskier assets like bonds and cyclicals awhile backing defensive assets like healthcare stocks and commodities.
After a rout in global tech stocks, the BofA survey found that fund managers’ allocation to tech stocks was at its lowest since August 2006.
The findings come after tech giants have plummeted in value in the past five months as investors grow increasingly wary of the outlook for long term growth amid rising interest rates.
The world’s largest tech firms had over $1tn wiped off their value in three days after the Fed hiked rates two weeks ago, with Microsoft shedding $189bn in value, Tesla falling $199bn and Amazon declining $173bn.