PROFESSIONALS ARE MORE PESSIMISTIC

Professional fund managers are getting more scared and more bearish according to the BoA - Merrill’s poll in October. The survey asked 220 money managers responsible for $640 billion of assets. The report shows their equity allocation dropped from 47% to 34% in their portfolio. That is the lowest level since 2012 and they are getting more pessimistic about the macroeconomic fundamentals globally. Only 30% of them think the world economy is in good shape.

They are getting scared about the volatility and uncertainty around the world. So, they raised their allocation to bonds to a seven-month high, 60%. All in all fund managers still prefer equities to bonds, but they are rapidly rebalancing. They also raised their cash holdings to 4.9%percent from 4.6%.

Fund managers also cut their emerging market equity exposures. They cut their euro zone equity exposure to a 15-month low, a net overweight position of just 4% as the economic outlook blackened remarkably.

Does the reshuffle of their portfolios mean anything? Yes, when the pros get back slightly to safe assets means lower buying power in the short-term in stock markets.

The BFM Assets Team.