Global fund managers, including hedge funds, have reduced their equity exposure substantially, showed a survey by Bank of America Merrill Lynch (BofAML).
Allocation to global equities continued to decline in March, falling to 3% overweight, according to the survey. This is the lowest since September 2016. Only once in last six years was the stance on equity so negative.
Investors aren’t too gung-ho on this asset class despite the ongoing rally and improved outlook on corporate earnings growth. Among those surveyed, hedge fund managers’ allocation to equities was the lowest since December 2016, said the survey report.
“The pain trade for stocks is still up," said Michael Hartnett, chief investment strategist at BofAML. “Despite rising profit expectations, lower rate expectations, and falling cash levels, stock allocations continue to drop. There is simply no greed to sell in equities."