Although global investors’ economic expectations have peaked, they remain “up for sustained growth” according to Bank of America’s June Global Fund Manager Survey.
Of the 207 fund managers surveyed, with total assets of $ 645 billion, 41% expect the global economy to become “much stronger,” 8 percentage points less than the previous month.
75% expect a stronger economy, net, 9 percentage points less than in the last monthly poll, and 67% expect global earnings to improve over the next 12 months, 11 percentage points less than the previous month.
64% of respondents said they expect inflation to rise in the next 12 months, 19 percentage points less than in the previous month. Meanwhile, 59% of net fund managers expect higher short-term rates, 4 percentage points less than in May.
Inflation expectations have peaked, with a net 64% of respondents expecting higher inflation over the next 12 months, a 19% decrease from the previous month.
A net 59% of those surveyed now expect a steeper yield curve, the lowest since August.
Nevertheless, 76% of global fund managers expect record growth and above-trend inflation for the global economy in the next 112 months, an increase of 7 percentage points on the previous month. Meanwhile, 11% of respondents expect growth above trend and inflation below trend over the next 12 months, an 8 percentage point decrease from the previous month.
The cash holdings of the surveyed asset managers fell from 4.1% in the previous month to 3.9%.
The survey shows that 68% of fund managers do not expect a recession until 2024 at the earliest, while 26% expect a recession in 2024 and 25% in 2023 expect the next 6 months.
The asset allocation in bonds is a 3-year low at -69% net, while the equity allocation is back at its annual high with a net overweighting of 61%.
Fund managers are now cyclically overweight, with a net overweight of 30% in banks, a net overweight of 11% in energy and a net overweight of 23% in materials.
Inflation and a taper tantrum represent the largest potential tail risks for fund managers at 30%, followed by asset bubbles (18%) and COVID-19 (10%).