Citywire for Financial Professionals
Stay connected:

View the article online at http://citywire.co.uk/money/article/a1119742

Fund managers say rally has legs despite growth fears

Fund managers are downbeat on the prospects for global growth, but still don't believe stock markets have peaked.

 
Fund managers say rally has legs despite growth fears
 

Fund managers are downbeat on the prospects for global growth, but believe the stock market rally still has further to run, according to the latest survey from Bank of America Merrill Lynch.

May's instalment of the monthly poll of professional investors showed deteriorating confidence in global growth, with just a net 1% of investors saying they expected the economy to strengthen over the next 12 months, the lowest level since February 2016.

Coupled with this, fund managers are still holding high cash balances. Although this has ticked down from 5% in April to 4.9% in May, it is still above the 10-year average of 4.5%.

But the vast majority of managers believe the stock market rally has further to run, with 80% saying equities are yet to peak. Neither do they believe a recession is imminent, with just 2% expecting one this year. The consensus is for a downturn either next year or in 2020.

Michael Hartnett, chief investment strategist at Bank of America Merrill Lynch, said the latest survey ‘presents good and bad news’.

‘Although cash levels remain high and growth optimism is at the lowest level in over two years, a majority of investors say there is room to grow in this equity bull market and don’t see signs of recession anything soon,’ he said.

‘Fund managers think the May rally can extend in the near-term.’

Managers have meanwhile piled into the commodities rally, running their highest weighting to the asset class since April 2012, when crude oil was trading at $105 a barrel. The oil price is up around 18% so far this year, with the latest leg of its rally sparked by US president Donald Trump's reimposing of sanctions on Iran.

Hawkish policy mistakes from the US Federal Reserve and European Central Bank are the top concern for 30% of managers. Second to this is the prospect of trade wars, the biggest worry for 25%, although this has eased.

Fund managers have continued to buy banks while ditching utilities, with allocation to the former rising to a net 36% overweight, the highest level on record.

They also favour technology and energy but have been avoiding consumer staples, telecommunications and utilities.

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

The Citywire Guide to Investment Trusts


In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.

Watch Now

Today's articles

Tools from Citywire Money

From the Forums

+ Start a new discussion

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add noreply@emails.citywire.co.uk to your safe senders list so we don't get junked.

Read more...

Charles Stanley drops Woodford from fund buy list

by Daniel Grote on May 22, 2018 at 10:57

Sorry, this link is not
quite ready yet