2024-01-17 10:38:04 ET
A new survey from %BankofAmerica (NYSE: BAC) has found that the world’s biggest investment funds are shifting money into %Commodities as they try to shield themselves from upcoming interest rate cuts and an anticipated drop in bond yields.
Funds with a combined $256 billion U.S. in assets under management (AUM) have cut their positions in both bonds and stocks at the start of 2024 and are instead piling money into commodities ranging from %Gold to orange juice.
Fund managers are shifting assets ahead of what they expect will be a sharp drop in bond yields as the U.S. Federal Reserve lowers interest rates in the year ahead.
According to the Bank of America survey, 91% of fund managers expect short-term interest rates to decline over the next 12 months.
Those same fund managers see commodities as an asset class that is likely to benefit from lower interest rates in the near-term.
Fund managers say they anticipate growth in commodity prices this year caused by a drop in interest rates, as well as a rise in demand and geopolitical disruptions caused by ongoing wars in Europe and the Middle East.
News that fund managers are shifting money comes as many analysts say we’re now entering a super-cycle for commodities, the first major growth cycle for the asset class in nearly 20 years.