According to the latest Bank of America Merrill Lynch fund manager survey:
The comments above and below are excerpts from an article by Dave Baxter (ftadviser.com) which has been edited ([ ]) and abridged (…) to provide a fast & easy read.
- 33% of investors surveyed believed gold was the best hedge against protectionism while a record net 15% of respondents considered it to be undervalued.
- 41% of investors pointed to a long US dollar strategy…as the most crowded trade followed by 14% who thought the most crowded trade was being short government bonds.
- a net 28% of respondents identified the USD as overvalued, marking the highest proportion since September 2006,
- 34% thought trade protectionist policies were the most likely catalyst for the end of the eight-year bull market while 28% identified higher interest rates and 18% opted for a “financial event”.
- 36% of respondents pointed to European elections and the associated “disintegration risk” in the eurozone as the biggest “tail risk” facing them, 32% identified the prospects of a trade war, while 13% talked of a crash in global bond markets.
- 23% of investors said they expected a boom – defined as above trend growth and inflation – to emerge compared with a mere 1% a year earlier although 43% said they expected secular stagnation – below trend growth and inflation – to emerge, down significantly from 88% a year ago.
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On a regional basis fund managers appeared to be taking advantage of bearish sentiment:
- Eurozone equities saw allocations rise to eight-month highs, with net 23% overweight, compared with 17% the month before.
- Emerging market equities saw allocations improve to net 5% overweight, up from net 6% underweight the month before.
- Sentiment on Japanese equities also appeared to be strengthening, with the proportion of investors wanting to be overweight the country in the next year rising from 9% to 14% in a month.