What You Need to Know
- Inflation now takes the top spot, according to the monthly survey of fund managers.
- Fund managers are “unambiguously bullish,” BofA found.
- Tech allocations plunged in February.
In the 12 months since the novel coronavirus was declared a global pandemic, investors have cited COVID-19 as the No. 1 tail risk. Now, the pandemic has receded as their biggest concern, according to the latest global fund manager survey, released Tuesday by Bank of America Global Research.
Thirty-seven percent of investors surveyed consider inflation the top tail risk, followed by 35% who say it is taper tantrums, up from 24% and 25% in last month’s poll. The COVID-19 vaccine rollout trails at just 13%, down from 26% in February.
The survey was conducted March 5 to March 11 among 220 investors with $630 billion in assets under management.
Fund managers are “unambiguously bullish,” BofA found, with 48% expecting a V-shaped economic recovery, up from 10% last May. A record net 91% of investors expect a strong economy.
Net 89% look forward to improved global profits over the next 12 months, up five percentage points from February and the highest level ever, BofA said.
Fifty-two percent of fund managers say they want chief executives to increase capital expenditures, versus 30% who want to see improved balance sheets.
Net 93% of fund managers expect higher inflation over the next year, a month-over-month increase of seven points.
BofA said the March findings indicate that a record 53% of investors expect higher growth-higher inflation over the next 12 months, whereas 29% expect higher growth-lower inflation. The report noted that this has happened only twice before, in March 2011 and December 2016.