Global fund managers see equity as best doing asset class in 2020

Mumbai: More than 50 per cent of global fund managers surveyed by Bank of America Merrill Lynch during the first week of November expect equity to be best performing asset class in 2020.

According to the survey, recession concerns have vanished and fund managers expect a stronger global economy in the next year.

“Over half of investors surveyed (52 per cent) expect equities to be the top performing asset class in 2020, followed by commodities (21 per cent) and cash (10 per cent),” the survey said.

“The bulls are back,” said Michael Hartnett, Chief Investment Strategist, of America Merrill Lynch. “Investors are experiencing FOMO—the fear of missing out—which has prompted a wave of optimism and jump in exposure to equities and cyclicals,” Hartnett said.

Investors added risk in November as their portfolios are no longer explicitly geared to assets that outperform in a low growth & low inflation backdrop, the survey said.

Allocation to global equities jumped, indicating the highest level in one year as investor cash levels fell from 5.0 per cent last month to 4.2 per cent in November, the biggest monthly drop since November 2016 and lowest cash balance since June 2013.

Bank of America Merrill Lynch global fund manager survey was conducted between Novem-ber 1-7 and 230 panelists with $700 billion of asset under managment participated in total.

According to the survey, the US dollar is expected to depreciate in the next 12 months, say 37 per cent of investors surveyed said making it the weakest outlook on the US dollar since September 2007.

Trade war concerns (39 per cent) continued to top the list of tail risks cited by investors, followed by a bond market bubble (16 per cent), monetary policy impotence (12 per cent) and a slowdown in China (11 per cent).

The dominant concerns of investors since 2011 have been Eurozone debt & potential breakdown; Chinese growth; populism, quantitative tightening & trade wars.

Trade war has topped the charts for 19 of the past 21 surveys, the report said.

US tech & growth stocks topped the list of the most crowded trades identified by fund managers, ahead of US corporate bonds.

Allocation to commodities fell as trade war concerns slightly subsided and allocation to emerging market equities rose month on month and EM became most preferred region among equity investors.