Investors are bearish as a result of fears over the Federal Reserve's moves to raise rates, according to the results of Bank of America's April Global Fund Manager Survey.
Of the 329 surveyed fund managers, which oversee a total of $929 billion in assets, expectations of global growth were at a net -71% in April, down from a net -50% in March and the lowest level ever in the history of the survey.
A global recession tops the list as the biggest tail risk for managers at 26% (previously 21% in March), followed by hawkish central bank hikes at 25% (previously 9% in March), inflation at 21% (18% in March), the Russia-Ukraine conflict at 16% (44% in March), asset bubbles popping at 7% (5% in March) and COVID-19 at 1% (equal to the previous month).
Cash levels decreased month-over-month to 5.5% in April, from 5.9% in March.
A net 63% among survey respondents expect global profits to decline over the next 12 months, up from the net 57% of respondents who communicated that expectation in March.
When asked how they see the global economy trending over the next 12 months, 66% said they expect stagflation (below-trend growth and above-trend inflation), which was up from 62% in March, and represented the highest percentage since August 2008.
Only 30% of fund managers expect a global economic boom (above-trend growth and inflation) over the next 12 months, down from 35% in March.
Also in the latest survey, 49% of respondents believe inflation is permanent (down from 51% in March), while 43% believe it is transitory (up from 42% in March). Only 2% of respondents expect a recession in the next 12 months, although that was up from 1% the prior month.
In addition, a net 35% of respondents saying they are currently taking lower-than-normal risk levels, down from a net 41% in March.
Asset allocation to U.S. equities rose slightly to a net 6% overweight in April's survey from 4% overweight in March. The allocation had been as high as a net 55% overweight as recently as January following a peak of a net 62% overweight in April 2021.
