Global investors haven’t been this worried about the economy since 2016

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Brendan McDermid | Reuters
Traders work on the floor of the New York Stock Exchange.

Global fund managers have positioned their portfolios for slower growth and lower interest rates, but they do not foresee a recession until the second half of next year at the earliest, according to a new survey.

Betting against European stocks was the most crowded trade in April, for a second month. While investors are negative on Europe, the second-most crowded trade favors buying big-cap growth names in the U.S. and China, through FAANG and BAT.

FAANG stocks are Facebook, Amazon, Apple, Netflix and Alphabet, while BAT represents Baidu, Alibaba and Tencent. The third- and fourth-most crowded trades are long U.S. dollar and then long Treasurys.

There were 187 participants in the survey, which was conducted between April 5-11.

The fund managers continue to see the biggest risks as the trade war and China’s growth slowdown. Trade wars have edged out China’s growth slowdown as the bigger worry in 10 of the last 11 months. The dominant concerns since 2011 have been euro zone debt, possible breakdown of the euro zone, Chinese growth, populism, quantitative tightening and trade wars.

Fund managers did increase their exposure to cyclical risk in the month by adding stocks and reducing cash. But the investing pros are most heavily positioned in utilities, and their allocation to global bank stocks is the lowest since September 2016. They also favor cash and emerging markets vs. stocks and the euro zone.

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