Biggest boost for U.S. stock allocations among global fund managers in a year

America baby

Even as U.S. stocks push ever closer to record territory, with recession fears swirling and some big rotation out of popular stocks, fund managers are buying America more than they have in over a year.

That’s according to the September Bank of America Merrill Lynch fund manager survey that published Tuesday. It showed that allocation to U.S. equities soared 15 percentage points to a net 17% overweight, the biggest monthly increase since June 2018, making it the most-preferred region amongst global managers.

The S&P 500   has gained nearly 20% this year, and 2% this month.

“We remain contrarian bullish, as this month investors have shown only a modest improvement in risk appetite,” said Michael Hartnett, chief investment strategist. “Fiscal stimulus would boost investor optimism.”

With that, bonds fell out of favor, as allocation to that asset class fell 14 percentage points to a net 36% underweight, after August saw the highest allocation since September 2011.

Receive News & Ratings Via Email - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings with MarketBeat.com's FREE daily email newsletter.

Allocation to global equities overall continued to creep up, rising 8 percentage points from last month to a net 4% underweight. And cash levels dropped a few points to 4.7%, well off a recent high of 5.7% in June and hovering above the 10-year average of 4.6%.

As for what’s bugging investors these days, trade-war concerns continued to top the list of tail risks at 40%, while “monetary policy impotence” and a bubble in the bond market were at the next two spots at 13% each, followed by a China slowdown at 12%. When asked specifically about a trade war, 38% of those surveyed said the U.S.-China impasse is the new normal and won’t be resolved, while 30% see a deal before the 2020 U.S. Presidential election.

As for the most crowded trade, 10-year U.S. Treasury bonds  stole the top spot for the fourth-month running.

It may not be next month. The yield on the 10-year Treasury, as low as 1.46% in the early stages of the month, has since skyrocketed to 1.84%. Yields move in the opposite direction to prices.

Leave a Reply

Your email address will not be published. Required fields are marked *

*