Asset allocation to global equities is at an all-time low

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© Reuters. Asset allocation to global equities is at an all-time low – BofA poll

By Senad Karaahmetovic

Three out of five fund managers are taking less than normal risk, representing record bearish positioning, writes Bank of America chief investment strategist Michael Hartnett.

The bank’s Global Fund Manager Survey (FMS) for September shows cash levels up 6.1% from 5.7%, only higher after 9/11 more than 20 years ago .

This is not surprising given that the FMS’s asset allocation to global equities is now at an all-time low. Similarly, managers are more underweight European equities than ever before and most are overweight consumer staples since the global financial crisis.

“Max bear sentiment + benign data = SPX retests (and fails) 4300; we remain fundamentally and patiently bearish,” Hartnett said in a client note.

Likewise, the survey showed that expectations for global growth are near historic lows, with 72% of respondents expecting a “weaker” economy next year. Although inflation is still named as one of the top 3 tail risks (central bank warmongering and geopolitics being the other two), 79% expect inflation to decline over the next 12 months.

The bearish sentiment is also reflected in the probability of a recession, with the probability now standing at 68%, the highest since May 2020.

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