Fund Managers Are Becoming Less Bearish

Fund managers are nonetheless bearish, however “quite a bit much less bearish” concerning the economic system this month than through the fourth quarter of final yr, in response to analysis by Financial institution of America.

The financial institution’s World Fund Supervisor Survey discovered 68% anticipated a recession, down from the latest peak of 77% in November, which was probably the most for the reason that early days of the COVID-19 outbreak.

As well as, whereas a internet 50% of respondents anticipated a weaker international economic system over the following 12 months, that was probably the most optimistic they’ve been about progress prospects prior to now yr. 

The financial institution additionally famous the “‘fee shock’ is over,” in a reversal of fund managers’ earlier outlook on the place short-term rates of interest are heading. The survey indicated a majority now believes these charges can be decrease, as in comparison with September when 78% anticipated they’d be larger, with simply 14% predicting decrease charges. The respondents projected the federal funds fee would peak at 5% within the second quarter and attain a “restrictive” degree the place Fed policymakers may cease boosting borrowing prices to struggle inflation.

Funding Decisions

Fund managers anticipate a mean goal of three,892 for the S&P 500 on the finish of 2023, down about 2.7% from its present degree. They reported their greatest will increase in month-to-month funding allocations had been in utilities, the eurozone, rising markets, and industrials. They mentioned they rotated out of the U.S., equities, well being care, and tech.

BofA World Analysis

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