Hopes for a coronavirus vaccine induced a strong “buy the reopening trade” sentiment among global fund managers surveyed in December by Bank of America Global Research.
Asked by pollsters when the vaccine would start to have a positive effect on the economy, 42% of investors said the second quarter of 2021, a more optimistic 28% said the first quarter and 19% said the third quarter.
The survey was conducted Dec. 4 to Dec. 10 among 217 investors with $576 billion in assets under management.
Investors’ cash levels fell to 4% from 4.1% in November, putting them near the fund manager cash rule’s sell signal. The cash rule holds that when average cash balance rises above 4.5%, a contrarian buy signal is generated for equities, and when the cash balance falls below 3.5%, a contrarian sell signal is generated.
The December survey found that net 1% of fund managers were underweight cash for the first time since May 2013, which BofA said was indicative of an early-stage recovery similar to those in October 2009 and January 2002.
Eighty-nine percent of investors said they expect global growth over the next 12 months, down two percentage points from November, and 56% expect the global economy to get a lot stronger, up 12 points from last month.
Net 79% of fund managers expected higher global inflation in the next 12 months, up four points from November and the highest level since July 2018.