On April 19, Bank of America’s survey of global fund managers found that fears of a (U.S. economy) recession have affected investors’ choices, with their stock-to-bond allocations falling to their lowest level since the global financial crisis.
The survey, the first since turmoil in the banking sector roiled markets last month, was the most pessimistic so far this year.
Respondents said fears of a credit crunch had pushed bond allocations to a net 10 percent overweight, the highest since March 2009.
Respondents considered the “most sought after” trades in April to be long big tech stocks (30%), short U.S. banks (18%), long Chinese stocks (13%), and short REITs ( 12%), long European equities (11%) and long the U.S. dollar (5%).
In addition, the degree of overweighting of defensive stocks by fund managers relative to cyclical stocks has hit the highest since the bottom of U.S. stocks in October last year.