Asset managers are investing larger sums in risk assets as recession concerns “vanish” and they expect the global economy to strengthen.
The amount of money that firms keep in cash for safe-keeping has fallen to 4.2% in November – its lowest level since June 2013 and the biggest monthly drop (from 5% in October) since 2016.
Bank of America Merrill Lynch’s monthly fund managers survey found that just over half of the 178 asset managers that responded expected equities to be the top-performing asset class in 2020, followed by commodities and cash.
Global corporate profits were expected to “surge” 25 percentage points and only 10% (compared to 35% in the previous month) of fund managers said they expected profits to deteriorate over the next 12 months.
Allocation to global equities has jumped 20 percentage points month-on-month to a net 21% overweight, the highest level in one year.
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