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Money Management

Record 46% of managers think stocks overvalued – BofA survey

A net 46% of money managers believe stocks globally are overvalued, the highest percentage recorded yet in the monthly Bank of America Merrill Lynch fund manager survey, the latest of which was released Tuesday.

The August survey also found managers believe a policy mistake by the Federal Reserve or European Central Bank, a crash in global bond markets and North Korea are viewed as the biggest tail risks to the market, according to 22%, 19% and 19% of managers, respectively.

On global growth and profit expectations, only a net 35% of investors predicted a stronger economy over the next 12 months, down from a net 38% in July and a net 62% in January. Only a net 33% of investors predicted global profits will improve over the next year, a significant drop from a net 41% in July and a net 58% in January. It is the lowest level since November 2015.

Other findings from the August survey include:

  • Eurozone, emerging markets and Japanese equity allocations rose to net 56% overweight, 39% overweight and 20% overweight, respectively, from 54%, 37% and 18%, all overweight, respectively, the previous month.
  • U.K. equity allocations fell to a net 37% underweight in August, the lowest since November 2008, down from a net 30% underweight in July.
  • Global equities and U.S. equities also fell in August, to a net 36% and 22% underweight, respectively, down from 38% and 20%, both underweight, respectively.

The survey of 202 money managers representing $587 billion in assets under management was conducted Aug. 4-10.