Most investment managers believe a new bull market is upon us, according to results of Bank of America's September Global Fund Manager Survey.
A net 58% of respondents believe the bull market has begun, up from 46% in August and up from 25% in May. And for the first time since February, more investment managers (49%) believe that the global economy is in an early cycle phase rather than in a recession (37%).
Results of the September shows 61% of investors predict a U- or W-shape recovery compared with 20% saying that recovery will be V-shaped.
Forty-one percent of respondents believed that the development of a COVID-19 vaccine is what it would take for rates to rise, vs. 37% that believe inflation would cause higher rates. Most investment managers (71%) expect a credible vaccine for COVID-19 to be announced by Jan. 30.
Net 18% of investors are overweight equities, but far from what BofA would categorize as "dangerously bullish." Meanwhile, net 35% of survey respondents are underweight U.K. equities, the lowest since March 2018. Cash levels rose to 4.8% from 4.6% over the month.
Investors are rotating into small-cap equities, with net 14% thinking large-cap equities will outperform small-cap, the lowest outlook on large-cap stocks since July 2018.
A second wave of COVID-19 infections tops the list of biggest tail risks for investors, followed by a tech bubble and the U.S. election.