Most fund managers are bearish about the prospect of an economic recovery from COVID-19, with many believing that a V-shaped recovery is incumbent on a breakthrough for a coronavirus vaccine, according to Bank of America Merrill Lynch's monthly fund manager survey released Tuesday.
BofA's May survey shows that more than half of surveyed money managers (68%) expect a bear market rally, 75% expect a U- or W-shaped recovery. By contrast, only 10% expect a V-shaped economic recovery from the coronavirus, with a vaccine breakthrough the most likely catalyst for such a recovery. Meanwhile, 25% foresee a new bull market.
Cash levels dipped to 5.7% from 5.9%. While this is well above the 10-year average of 4.7%, BofA believes this still represents a sign that investors remain bearish. Allocations to fixed income rose to the highest levels since July 2009.
In May, fund managers were underweight cyclical assets such as energy, equities and Europe, while overweight defensive assets such as health care, cash and fixed income.
