Inflation unlikely to raise further: BofA



Almost three quarters of respondents believe inflation is only transitory, according to a Bank of America (BofA) survey, with the percentage of respondents expecting higher inflation down 19% from May.
According to the latest Bank of America Global Fund Manager survey, which surveyed 224 fund managers with $667 billion in assets under management, a net 64% of investors were expecting higher inflation in the next 12 months, down 19% from the previous month.
Some 72% said they believed inflation was only transitory compared to 23% who thought it would be permanent.
“Investors [are] bullishly positioned for permanent growth, transitory inflation and a peaceful Fed taper via longs in commodities, cyclicals and financials,” the report said.
However, the threat of rising inflation remained the number one tail risk for respondents, joint with the threat of a taper tantrum. Over half of respondents expected the US Federal Reserve to taper its asset purchases in August/September.
Regarding positioning, BofA said investors were “significantly overweight” cyclical stocks such as the Eurozone, banks, energy and materials and were underweight defensives. There was a 39% underweight by respondents to utilities, the largest since February 2017. Technology weightings had doubled from 11% to 22% over the month.
Investors said they expected value stocks would be the asset most likely to outperform over the next 12 months followed by technology stocks.
Cash was down from 4.1% in May to 3.9% in June which BofA said was an indicator to sell global equities.
Recommended for you
Helped by adviser demand, year-to-date flows into the two-largest ETF providers are more than double the volume they were at the same time last year as Vanguard’s largest ETF passes $20 billion.
Betashares is gearing up to launch two new ETFs in a clear bid to challenge similar offerings from global ETF giants.
ETF provider Global X has surpassed $10 billion in assets under management and is now targeting to double this figure by 2027.
With active players closing funds and struggling to hold their own against passive players, recruiters have debated whether there is still a hiring market out there for active managers?