Summary
BofA Global Research surveys indicate that global fund managers’ sentiment has risen to its highest level since January 2022, with two-thirds of fund managers expecting the global economy to achieve a “soft landing” and avoid falling into recession next year. Fund managers noted that bonds and technology stocks could be the “biggest winners” from the interest rate cuts that the Federal Reserve is expected to implement in the first half of 2024.
Global Fund Managers’ Sentiment
Two-thirds of global fund managers surveyed expect that the global economy will achieve a “soft landing” and avoid falling into recession over the next 12 months. Furthermore, 89% of fund managers anticipate interest rate cuts in 2024, identifying bonds and technology stocks as the potential biggest winners from the interest rate reductions expected from the Federal Reserve in the first half of the year.
Asset Forecasts for 2024
When asked which asset class they believe will perform best in 2024, nearly half of the participants (45%) indicated bonds, with 20% reporting that they hold “overweight” positions or higher-than-usual allocations in bonds, the largest share reporting this since March 2009. This came after a few weeks of declining bond values and the yield on 10-year Treasury bonds rising above 5% for the first time since 2007.
Asset Allocation
Surveys showed that fund managers have been most overweight in equities since the Federal Reserve began raising interest rates, with 15% indicating they hold overweight positions in stocks. Only 3% indicated they have overweight positions in cash, the lowest share since April 2021.
Most Crowded Trades
According to fund managers, the most crowded trades were long positions in the “magnificent seven” stocks, short positions in Chinese stocks, and long positions in Japanese stocks.
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Article Sources:
Investopedia
BofA Global Research
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