Most fund managers expect a global recession in 2020, while managers' cash levels have jumped to the highest level since after Sept. 11, 2001, according to Bank of America Merrill Lynch's monthly fund manager survey released Tuesday.
BofA's April survey shows that cash levels have risen to 5.9% from 5.1%, the highest they've been since after 9/11. The survey also reveals that 93% of respondents expect a global recession this year. BofA calls April's findings "peak pessimism."
More than half of surveyed money managers (52%) believe economic recovery from COVID-19 will be U-shaped, while 22% say W-shaped. Just 15% say it will be V-shaped.
The pessimism has also made its way towards managers' allocations to equities, which are the lowest they've been since March 2009 after the global financial crisis.
More than half of respondents (57%) say that a second wave of COVID-19 is the biggest tail risk, followed by a systemic credit event (at 30%).
Managers are very long on cash, health care, staples, utilities, U.S., technology and bonds, and very short on energy, equities, materials, industrials, banks, and the U.K. and eurozone.