Bullish sentiment seen in March, recession unlikely: Bank of America Securities
fund manager survey by Bank of America Securities showed the risk appetite in March is the highest since November 2021, while the firm's 'Bull & Bear' indicator shows sentiment is 'bullish but not extremely bullish' yet.
Two-thirds of the survey respondents said a recession is «unlikely» in the next 12 months with 62% forecasting a «soft» landing, while 23% said «no» landing (5% in October 2023) and 11% said «hard» landing (30% in October 2023). Bank of America said 226 fund managers with $572 billion of assets under management (AUM) participated in the March survey.
The average cash level of the fund managers who were surveyed ticked up to 4.4% from 4.2% of their AUM, said Bank of America Securities.
«As per BofA Global FMS (fund manager survey) cash rule, when FMS average cash balance rises above 5%, it triggers a buy signal for equities (contrarian bullish signal) and a fall below 4% triggers a sell signal for equities (contrarian bearish signal),» said the brokerage.
Fund managers said the most crowded trades in March have been 'magnificent 7' (Alphabet, Amazon, Apple, Meta Platforms, Microsoft, NVIDIA, and Tesla), Japan and Bitcoin. Bearish bets on Chinese equities are the second most crowded trade. Investors are split on whether artificial intelligence (AI) stocks are in a bubble with 40% saying a 'yes' and 45% saying a «no».
