Fund managers cut their US equities allocations by the largest amount ever recorded, according to the Bank of America (BofA) Fund Manager Survey for March.
The other side of this particular coin was the biggest jump in cash allocations the survey has ever found, as managers chose to de-risk rather than send the money into other risk assets.
The bearish move appeared to be prompted by worries over the global economy, with BofA identifying the second biggest drop in global growth expectations among fund managers ever. The prospect of stagflation and a protracted trade ware were two concerns widely cited.
Average cash allocations rose from 3.5% to 4.1% over the quarter, driven in large part by a sell-off of US tech stocks.
Eurozone stocks bucked the trend with some money finding its way into the asset classes to lift allocations to the highest since July 2021.
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Consumer staples also saw inflows, reaching the highest level in 18 months, and bank stocks benefited too. The survey also found the biggest rotation to high versus low dividend stocks on record.
Looking forward, fund managers said the S&P 500 needs ‘trade war concerns to unwind’ to return to above 6,000 points.
Managers indicated a recession in the US could take the S&P 500 below 5,000 points before better performance returns.
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