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BofA Merrill Lynch October Fund Manager Survey finds investors most bearish on global growth since 2007

Average cash balance holds steady at 5.1%, well above the 10-year average of 4.5%, as investors stay bearish. A record 85% of survey respondents think the global economy is in the late cycle, 11ppt above prior highs in Dec. ‘07

  • When asked how the global economy will develop over the next year, net 38% of respondents expect deceleration, the worst outlook on global growth since Nov. ‘08
  • FMS investors think the USD is very overvalued, notably against EM currencies which are seen as never having been more undervalued in survey history
  • Looking at corporate earnings, net 35% of respondents indicated they do not expect an improvement of 10% or more in the next year, a significant swing from net 35% expecting improvement from February’s survey
  • A net 20% of investors surveyed think global profits will deteriorate over the next 12 months, a 2-year low and major reversal from January’s survey, when a net 39% noted they expected an improvement


  • A trade war (35%) remains the biggest tail risk concern for FMS investors, although conviction fell for the third month in a row as concerns about Quantitative Tightening rise (31%); a China slowdown comes in third (16%)
  • “Long FAANG+BAT” (32%) remains the most crowded trade identified by investors for the ninth straight month, followed by “Short US Treasuries” (19%) and “Long S&P 500” (18%)

Asset allocation

  • Allocation to global equities holds steady at net 22% overweight, close to July’s recent low of net 19% overweight
  • Investor allocation to US equities reverses much of the climb from the past two months, falling 17ppt to net 4% overweight; US loses out to Japan as most favored equity region globally
  • Allocation to bonds slips 5ppt to net 50% underweight, but still firmly off the record low of net 69% underweight in February

“Investors are bearish on global growth,” said Michael Hartnett, chief investment strategist, “but not bearish enough to signal anything but a short-term bounce in risk assets.”

Next Finance October 2018


BofAML’s October Global Fund Manager Survey was conducted October 5-11; 231 panellists with $646bn AUM participated in total. 174 participants with $518bn AUM responded to the Global FMS questions and 125 participants with $266bn AUM responded to the Regional FMS questions.



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