Tech stock trading has never been more crowded, according to a majority of fund managers in a recent survey.
With certain tech stocks thriving during the pandemic, nearly 75% of respondents said long US tech stock is the most crowded trade – the highest reading ever.
According to the Bank of America’s latest fund manager survey, asset allocators are “stubbornly” long health care, US, tech, cash, bonds, and short energy, as well as the UK, banks, and industrials.
The report also highlights two notable shifts in investor sentiment. Allocation to commodities is now at its highest since July 2011, whilst there has been a large jump in European equity exposure, with 42% of managers saying they want to increase euro exposure.
Investors remain cautious, however, with 52% of fund managers saying that a second wave of Covid-19 poses the largest tail risk, while 71% believe the stockmarket is overvalued in July.
Only 14% of fund managers believe economic recovery will be V-shaped, while nearly half expect a U-shaped recovery.
Against this backdrop of uncertainty, cash levels remain elevated. Cash levels within institutional funds increased to 4% in July, up from 3.3% in June. Retail funds’ cash weightings decreased slightly however, dropping from 5.2% to 4.8%.
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