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December 14, 2021 at 12:33 PM
What You Need to Know
- Forty-two percent of global investors say hawkish central bank rate hikes are the No. 1 tail risk, while 22% believe inflation is the top tail risk.
- Fifteen percent worry most about a COVID-19 resurgence.
- Only six out of 100 investors think a recession could occur in the next 12 months.
Forty-two percent of global investors in December said hawkish central bank rate hikes are the No. 1 tail risk, according to Bank of America Global Research’s latest global fund manager survey, released Tuesday.
Twenty-two percent of survey respondents said inflation is the biggest tail risk, while 15% worried most about a COVID-19 resurgence.
Investors increasingly fearful of central bank moves raised their cash levels to 5.1% from 4.7% in November. Cash allocation rose 14 percentage points month over month to net 36% overweight, the largest since May 2020, BofA said.
Fund managers’ equity allocation declined 12 points from November to net 46% overweight, the lowest since October 2020. Their bond allocation rose six points to net 63% underweight.
Thirty-nine percent of investors said the most-crowded trade in December was long tech stocks. Eighteen percent said it was long Bitcoin, and 17% said the most-crowded trade was long ESG.
The survey was conducted Dec. 3 to Dec. 9 among 371 participants with $1.1 trillion in assets under management.
Growth Expectations Improve
The December survey found that investors’ global growth expectations have stabilized and started to improve, with net 4% in December expecting improvement, compared with 91% who did so in March.
