XLV - Fund managers favor bonds over stocks by biggest margin since 2009 - BofA survey

2023-04-19 07:34:21 ET

Money managers are the most Overweight bonds compared to equities since the Financial Crisis, according to the latest survey from BofA Securities.

The April Fund Manager Survey of 286 panelists with $728B in assets under management was the "most bearish" of the year, strategist Michael Hartnett said.

"Fear of credit crunch drives bond allocation ( TBT ) ( TLT ) ( SHY ) ( IEI ) up 9ppt MoM to net 10% OW, the largest overweight since Mar'09," Hartnett wrote.

In addition, fund managers are "most bearish real estate ( IYR ) since Jul'09; record longs in IG ( LQD ) vs. HY ( HYG ) ( JNK ), high quality vs. junk," while April saw big rotation into US ( NYSEARCA: SPY ) ( QQQ ) ( DIA ), healthcare ( XLV ), staples ( XLP ), tech ( XLK ), and out of EU ( VGK ), UK ( EWU ), energy ( XLE ), financials ( XLF )," which saw the most Underweight allocation since May 2020.

A bank credit crunch and global recession vaulted to the top of the list of biggest tail risks at 35%. It didn't crack the top five in last month's survey .

High inflation keeping central banks hawkish was second at 34%, with a systemic credit event dropping to third at 16%. Geopolitics stayed in fourth at 11%.

The list of most crowded trades had two new entrants at the top: long Big Tech at 30% and short U.S. banks ( KBE ) 18%. Long China equities ( MCHI ) stayed in third from March at 13%

JR Research, leader of the Investing Group Ultimate Growth Investing, recently expressed skepticism about a deep recession .

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