(Bloomberg) -- Global fund managers are ending the year with the biggest overweight in U.S. stocks since August 2013 as risk appetite outweighs inflation and tapering woes.
According to a Bank of America Corp (NYSE: BAC ). survey conducted Nov. 5 to 11, investors are now more constructive on global growth and earnings, and 51% expect lower inflation. Fund managers increased their allocation to U.S. equities by 13 percentage points from the previous month to a 29% overweight, the survey showed.
Clients are “convinced” inflation is transitory and expect the Federal Reserve to remain “well behind-the-curve,” BofA strategists led by Michael Hartnett wrote in a note on Tuesday.
Emerging-market and U.S. equities are seen providing the best returns next year, while most investors expect Bitcoin to remain within the $50,000 to $75,000 range in the next 12 months, according to BofA. The largest digital token currently trades at a little over $60,000.
Global equities have been rallying since the start of October, trading near a record high, as a robust earnings season and strong corporate outlooks have fueled optimism that companies can overcome surging costs and supply constraints.
Fund managers reduced their cash holdings to 4.4% from 4.7% in October as investors bought the dip in stocks, the survey showed.
BofA surveyed 345 participants with $1.1 trillion under management.
Other survey highlights include:
- Most-crowded trades in November survey were long tech stocks, long Bitcoin, long ESG, short U.S. Treasuries, short China and EM stocks, and long oil
- Bitcoin is a bubble, according to 59% of surveyed investors
- Biggest tail risks are inflation, central bank rate hikes, China
- More investors want companies to boost spending on capex
- For Fed rate hikes in 2022, 39% of investors expect two hikes, while 37% expect one, and 13% expect none
- Allocation to Eurozone stocks declined 1 percentage point versus October to net 33% overweight, allocation to EM equities rose 3 percentage points to a net 2% underweight, while exposure to U.K. stocks fell 3 percentage points to 15% underweight, the largest since January 2021
©2021 Bloomberg L.P.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.