Recession fears reach eight-year high
Fund managers’ expectations of a recession have reached the highest level since 2011, according to a survey by Bank of America Merrill Lynch (BofAML).
In its monthly global fund manager survey, which surveyed 224 fund managers with US$553 billion in assets under management, found one third of respondents expected a global recession in the next 12 months. This was the highest probability since October 2011.
BofAML said this was in line with their own analyst expectations who thought there was a one in three chance of a recession.
A record 50 per cent of investors were concerned about corporate leverage, some 46 per cent said they wanted corporates to use cashflow to improve balance sheets instead.
Looking at their asset allocation, BofAML said investors sold cyclical value assets during the month and bought defensive/growth assets such as consumer staples and technology instead while bonds reached an eight-year high as investors rotated away from equities.
In line with this, they were also holding a 41 per cent overweight to cash which BofAML said was ‘well above’ the long-term average.
Within equities, the UK and Japan were both out of favour for regional equity allocations with allocation to UK fell to a 29 per cent underweight on Brexit concerns while allocations to Japan reached a seven-year low.
AUTHOR
Laura Dew
Recommended for you
Australian fund managers are actively seeking to launch Cayman versions of their funds to attract offshore flows, with Regal Partners set to launch its latest offering this month.
As private markets gain traction in Australia but only a limited pool of talent is available, three recruiters explore whether fund managers should consider looking overseas to find top talent.
With an explosion of private credit managers appearing in the market, two alternatives experts believe a consolidation is needed to maintain the quality of the sector.
Bentham Asset Management has become the latest fund manager to expand its distribution team as it reports increased interest in its credit strategies.
