(Bloomberg) — The “frothy bull” market sentiment of the past few months is ending as global investors turn bearish, according to Bank of America Corp.’s latest fund manager survey.
The bank’s broadest measure of the market’s mood fell to a six-month low in March and cash levels surged, strategist Michael Hartnett wrote in a note. Participants cited the ongoing war in Iran and turmoil in private credit as reasons to be nervous.
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Notably, the survey also showed the biggest jump in cash since March 2020, with holdings reaching 4.3% in March. For the eighth month in a row, respondents said that private equity and private credit are the most likely source of a “systemic credit event.”
The war in the Middle East has turned investor attention away from the artificial intelligence race, which was the focus of last month’s survey, to the risks facing the global economy as oil prices flirt with $100 a barrel. At the same time, market jitters around banks’ exposure to private credit are increasing.
Still, investors aren’t yet as bearish as they were during April’s tariff turmoil. Positioning is “far from uber-bear levels seen at recent big lows,” Hartnett said. And investors were more relaxed about the AI spending race, with a majority saying the industry is not in a bubble.
Other highlights from the report include:
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Investors are most long commodities since April 2022. The survey showed that allocation is at a net 34% overweight.
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A net 53% of investors were overweight emerging-market equities, the highest since February 2021.
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Participants had the lowest allocation to consumer discretionary stocks since December 2022.
The BofA Global survey was conducted between March 6 and 12, and canvassed 181 participants with $529 billion in assets.
–With assistance from Michael Msika.
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