BofAML: Fund managers skewed to deflationary plays
Global fund managers are becoming more defensive in their asset allocation, according to Bank of America Merrill Lynch, with the firm describing how there is a ‘huge skew’ toward deflation rather than inflation plays.
In its monthly global fund manager survey, BofAML surveyed 230 investors with US$620 billion ($908.6 billion) in assets under management.
Investors were found to be “long cash, REITS, consumer staples, US, pharma (deflation plays) and short energy, UK, industrials and equities (inflation)”.
“The October FMS shows investor sentiment bearish despite credit and equity rally, if trade war and Brexit fears are unrealised in Q4 then macro can beat expectations, validating our contrarian bullish view,” BofAML said.
Cash levels rose from 4.7% in September to 5%, although this was less than the 5.7% weight seen in June.
The biggest underweight was seen in energy stocks and the UK where investors were hesistant to invest due to Brexit. On the other hand, they were most overweight cash, REITS and consumer staples as well as the US which 22% of respondents said they expected would outperform in the 2020s.
BofAML said the weighting to consumer staples was the biggest underweight investors had been since February 2016.
Recommended for you
Money Management spoke with two brand consultants to how Perpetual can best rebrand its business as the 138-year name is sold to private equity firm KKR.
Pinnacle remains a “standout” fund manager, according to Morningstar, amid a challenging backdrop for active asset management and the addition of a new global equities affiliate from the UK.
Platinum Asset Management saw outflows of $1.65 billion in April, partly as a result of redemptions from institutional mandates and product rationalisation initiatives.
In this latest Meet the Manager profile, Money Management speaks with Ophir Asset Management co-chief executive Andrew Mitchell.