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April 14, 2020 at 03:01 PM
(Photo: Susana Gonzalez/Bloomberg)
Investors’ already downbeat sentiment in March turned even grimmer in April, according to the latest Bank of America Global Research global fund manager survey, released Tuesday.
Fund managers’ April cash levels surged to 5.9% from 5.1% in March and 4% in February, the highest cash level since the 9/11 attacks and well above the 10-year average of 4.6%.
Investors’ cash allocation jumped 13 percentage points from March to net 54% overweight, the highest reading since October 2008 and the second highest reading in the survey’s history, according to BofA.
Ninety-three percent of fund managers said they expected a global recession in 2020. This compared with 86% who expected one in March 2009.
The International Monetary Fund this week predicted the worst recession since the 1930s in the wake of pandemic-related shutdowns, with global GDP contracting by 3%.
The BofA survey found a rare dichotomy between GDP and earnings-per-share expectations. Net 63% believed profits would deteriorate in the next 12 months vs. net 2% who expected worse global growth in that period.
The survey was conducted April 1 to 7 among 207 panelists with $597 billion in assets under management.
Here’s how fund managers saw economic recovery from the coronavirus shock shaping up:
- U-shaped: 52%
- W-shaped: 22%
- V-shaped: 15%
- L-shaped: 7%
- Other: 3%
Seventy-nine percent of fund managers surveyed said they wanted corporations to improve their balance sheets, the highest demand level in 20 years, according to BofA. At the same time, a record low net 5% of investors thought corporates should return cash to shareholders via buybacks, dividends or mergers and acquisitions.
