Trade war dominated fund manager concerns in 2019

Fund managers (33%) around the world believe that the US/China trade war is the biggest tail risk, according to Bank of America’s (BofA) Global Research.

Its latest fund manager report found that in December, the threat of the trade war had reduced as less managers believed it was the biggest tail risk compared to November at 38%.

The trade war also topped the charts for 20 of the past 22 monthly surveys.

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Source: Bank of America Global Research

Another 22% believed the outcome of the 2020 US Presidential election was the largest tail risk, followed by ‘bond bubble pops’ (19%), and ‘monetary policy impotence’ (12%).

However, the survey also found that global growth expectations jumped 22 percentage points to 29% of investors that indicated they expected global growth to improve, and recession concerns plummeted 33 percentage points to 68% of investors believing a recession was unlikely in 2020.

When managers were asked what trade they thought was the most crowded, 34% said ‘long US tech and growth stocks’ followed by ‘long US treasuries’ and ‘long investment grade corporate bonds both at 20%, and short volatility at 19%.

In terms of sectors, most managers said they were overweight technology (32%), pharma (31%), discretionary (12%), and banks (9%).

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