There is no reason to be bearish, says manager of US$645bn AUM

Bank of America's Global Fund Manager Survey (FMS) surveyed 225 investors, collectively holding $645 billion in assets under management, to determine the outlook for the next 12 months, including their risk tolerance and asset allocation. The survey, which ran over the first two weeks of February this year, has painted a picture of an optimistic market with little cause for concern… yet.

Only 13% of FMS investors believe the market is currently in a bubble.

On the macro-outlook, 91% of investors are predicting a stronger economy this year, understandable considering the despair of the previous year, and the majority are now comfortably predicting a V-shaped recovery. We are at peak Goldilocks, with the top expectation (40% of FMS investors) predicting the next 12 months will remain at above-trend growth and below-trend inflation. The expectations for inflation are down 6% month-on-month, but are still close to the peak relative to the past five years. Only 13% of FMS investors believe the market is currently in a bubble.

We've put together the key stats and charts for Livewire Markets readers from Bank of America's clients-only survey. 

By the numbers…

• Investment in equities and commodities is at its highest level since February 2011
• "Cash is trash" says BoA, with fund manager's down to 3.8% cash levels
• A record 31% of investors think small-caps will out-perform large-caps in the next 12 months.
• Optimism for Emerging Markets has softened, pulling back from an extraordinarily high conviction base - above a 1.75 Z-score.
  
• But emerging markets remain the golden child, with 51% of investors believing EM will outperform in 2021
• Bubble, bubble, toil and no trouble: only 13% of investors think the US equity market is in a bubble. The majority (53%) believe it’s a late-stage bull market

• Most crowded trades: long tech, long bitcoin and short on the US dollar
• Ding ding ding: in the value versus growth championships, the pair are going in for another round. Tech is at the top of the leaderboard for month-on-month change in position. 

• For the first time since Jan 2020, investors want CIO's to increase capex, rather than investing in balance sheets
• Yield curve expectations reach Lehman-levels: 82% of investors are expecting a steeper yield curve 

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