The survey, which polled 235 fund managers running combined assets of $640bn (€470bn), found that the proportion of respondents overweight US equities fell from almost one-third in August – the third-largest such overweight in the past ten years – to zero in early October.
In contrast, eurozone equity allocations rose, continuing an upturn in appetite for the region that began in August. Some 46% of survey participants were overweight the asset class this month – the highest such reading since the early days of the subprime crisis, in June 2007.
The rotation from US to eurozone equities appears linked to protracted negotiations over the US “debt ceiling”, which additionally damaged confidence in the global economic recovery.
BofA ML found that the share of investors expecting global growth to improve over the following 12 months was strongly positive but had fallen – from 69% in September to 54%. Similarly, a net 71% forecast that growth would remain “below trend” over the same period – up from 61%.
This less bullish stance on the macroeconomic outlook was reflected in overall equity allocations, as the net share of fund managers overweight stocks declined from 60% to 49%, month-on-month. Allocations to fixed income and cash both rose.
“Events in Washington clearly caused investors to shift back towards their benchmarks, but asset price gains can still be driven by high cash levels,” wrote Michael Hartnett, chief investment strategist at BofA ML Global Research.
Platinum members can view the latest Expert Investor Europe Manager Sentiment Survey results here.