Investors remain cautious about the overall macroeconomic backdrop, but have turned bullish on interest rates and moved more into bonds, according to the Bank of America November Global Fund Manager Survey released Nov. 14.
Specifically, investors expect weaker global growth in 2024, but almost three-quarters (74%) predict a soft or no landing at all, while 21% expect a hard landing.
More than three-quarters (76%) of investors in the survey believe the Federal Reserve's hiking cycle is over, while 80% expect lower short-term interest rates next year, and 61% expect bond yields to drop.
The survey also revealed that in November investors rotated into bonds, tech stocks, telecom stocks, real estate investment trusts as well as Japanese stocks; while rotating away from materials, industrials, banks, commodities, U.K. stocks and cash.
Indeed, the average cash balance fell to 4.7% of assets under management in November (the lowest such level since November 2021) from 5.3% in October. This marked the largest such monthly drop since January 2023.
Investors' allocation to bonds in November was at its third highest such overweight position in the past two decades. The only times when bonds were more overweight occurred in March 2009 and December 2008.
In addition, more than one-half (54%) of investors surveyed expect bonds to be the best performing asset class in 2024, while 29% think stocks will rank as the top performer.
The poll surveyed 265 participants with $632 billion in assets under management and was conducted Nov. 3-9.