Asset managers’ allocation to banks is the second highest level on record, a survey found.
According to Bank of America Merrill Lynch’s (BofAML) May ‘Global Fund Manager Survey’ allocation to banks rose to a 36% overweight position.
In May, global investors favoured banks, technology and energy and avoided staples, telecoms and utilities.
Allocation to commodities remained at net 6% overweight, the highest since April 2012.
At the same time average cash balances decreased to 4.9% in May, from 5% in April, but still above the ten-year average of 4.5%.
Expectations for faster global growth continued to fall, as just 1% of investors indicated they think the global economy will strengthen over the next 12 months – the lowest level since February 2016.
In a new survey section on exchange-traded funds (ETFs), 53% of respondents said they actively use ETFs in their portfolio.
ETF investing remains predominantly an equity-focused activity for fund managers, as 77% of survey participants indicated they use them to gain equity market exposure, compared to just 8% for corporate bonds and 5% for government bonds.
Michael Hartnett, chief investment strategist at BofAML said the survey results were “good and bad news.
He added: “Although cash levels remain high and growth optimism is at the lowest level in over two years, a majority of investors say there is room to grow in this equity bull market and don’t see signs of recession anytime soon.”
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