A new bull market has begun - BofA's Fund Manager Survey

September 15, 2020 6:54 AM EDT

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The latest Fund Manager Survey (FMS) from BofA Securities shows that the majority of respondents believe that a new bull market has begun, following a historic rally from the March lows.

Michael Hartnett, a Chief Investment Strategist at BofA Securities, shares some key insights from the survey:

• 58% of investors say the new bull market has started (compared to 25% in May).

• For the first time since Feb more investors (49%) say macro in early-cycle phase than recession (37%); net 84% say global growth up next 12 months.

• 61% of respondents predict U- or W-shaped recovery vs 20% say V-shaped; 51% still prefer balance sheet discipline vs 37% want increased capex (was 13% in Apr). According to Hartnett, this shows FMS investor doubt on the sustainability of the upturn.

• FMS cash levels rose from 4.6% to 4.8% (greed <4%, fear >5%).

• Long US tech most “crowded trade” of all-time (80%). This brings “tech bubble” to the second biggest FMS tail risk after COVID-19 “second wave”;

• FMS rotation continues on macro; tech, healthcare, large cap longs trimmed, industrials at highest overweight since Jan’18, flows to small cap & value up; but no regional rotation (US>EU/UK/EM) and banks/energy shunned.

• 41% say credible COVID-19 vaccine most likely trigger for higher bond yields, followed by inflation (37%); investors say vaccine announcement most likely Q1’21;

The survey was conducted from 3rd to 10th September 2020, with a total number of 224 managers, with $646 billion in assets under management, participating in the survey.

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