According to Bank of America (BofA) analysts, investors now have the largest shortfall in equity investments compared to bonds since 2009. The percentage of managers who believe a recession in the US economy is coming has also risen to 63%. What else can we learn from the BofA report, and which assets could be most affected?
Source: BofA, Global Fund Manager Survey
Bonds again dominate fund portfolios
Source: BofA, Global Fund Manager Survey
84% of Investors surveyed expect inflation to fall and 72% of them expect interest rates to be cut in the coming months. In such an environment, investing in bonds may prove to be profitable, as bond prices may tend to rise when interest rates fall. If rates do fall, the iShares TLT 20+ Year Treasury Bond ETF (TLT), which focuses on long-term bonds, could gain in value. However, the longer a bond's maturity, the more susceptible its prices may be to volatility.
Source: Tradingview
Second only to history was the daily consumer goods sector. These include, among others, food, beverages, cigarettes, hygiene products, etc. The increased exposure of the funds can have a positive impact on, among others, the listing of the Consumer Staples Select Sector SPDR Fund to ETF (XLP). The fund consists of shares of companies from the consumer goods sector. Its holdings include: The Coca-Cola Company, Procter & Gamble Co, PepsiCo Inc, Wal-Mart Stores Inc, Colgate-Palmolive Co and many others. The fund includes stocks from the food, beverage, tobacco, hygiene, packaging, home appliances and retail sectors.
Source: Tradingview
Gold overvalued?
Source: BofA, Global Fund Manager Survey
According to the Global Fund Manager Survey of Bank of America, for the first time since August 2020, more hedge fund managers believe that the price of gold is overvalued. Which may result in investors being inclined to buy gold, thus affecting its price. In addition, the survey results showed that commodities were the second most traded item with investors trading down more than 15%.
Source: Tradingview
Grzegorz Dróżdż, Market Analyst of Conotoxia Ltd. (Conotoxia investment service)
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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