Home / Business / "Fear of Missing" triggers huge fund managers' transition from cash to shares, says Bank of America Merrill Lynch

"Fear of Missing" triggers huge fund managers' transition from cash to shares, says Bank of America Merrill Lynch





Reuters

Increased expectations of a US-China trade agreement have prompted fund managers to reconsider their positions.

A "fear of missing out" triggered a huge switch of fund managers from cash to stock, according to a survey by Bank of America Merrill Lynch released on Tuesday.

Survey of 230 executives who had $ 700 billion in assets found cash reserves decreased 0.8 percentage points to 4.2%, the largest monthly decline since November 201

6 and the lowest cash balance since June 2013.

Global equity allocation increased 20 percentage points month on month to net 21% overweight, the highest level in a year.

Growth expectations jumped 43 percentage points from -37% to net 6%, the biggest gain since the survey began in 1994.

"Investors experience Fomo – fear of missing out – which has led to a wave of optimism and hope in stock exposure and cyclical conditions, "said Michael Hartnett, chief investment strategist at BAML.

The market has been more lively for optimism that the US and China will reach a trade deal and that the UK will leave the European Union in an agreed manner.

Dow Jones Industrial Average

DJIA, + 0.17%

registered its ninth record-high year on Monday and is up almost 7% in three months.

10-year return

TMUBMUSD10Y, -0.54%

has risen to 1.93%, up 47 basis points from the September low price.

That optimism came despite the fact that the bosses identified the trade war problems as the greatest risk. Managers said American technology and growth stocks are the most tight trade, according to the Bank of America Merrill Lynch survey.

A separate study released on Tuesday by Germany's ZEW Institute found a similar phenomenon.

The ZEW economic sentiment indicator for Germany rose to -2.1 in November, a gain of 20.7 points from October. The same survey of 200 analysts found expectations that the US shot up 22.5 points, however, to a level of -20.1.


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