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Fund Managers: Pessimism Rising, Banks In Crisis

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

Bank of America’s monthly Fund Managers Survey (sometimes simply abbreviated to “FMS”) is an interesting barometer of major institutional players around the world. This month, 251 participants with $666 billion in Assets Under Management (AUM) responded to the survey. The compiled results are fascinating in terms of starkness. The outlook presented therein also align closely with the findings of most past articles published here.

Overall, survey respondents are taking the lowest level of risk in their investment decisions since the Global Financial Crisis (GFC):

The shadow of the GFC looms large even in the bond portfolios held by the respondents. The net percentage of respondents opining that they’re overweight in (or “hold too much of”) bonds are at highs unseen since March 2009, when the GFC was in full swing and equity markets were at deep lows.

Given the rising concerns of commercial real estate being increasingly unviable given high debt as well as vacancy rates, survey respondents reveal that they’re underweight in (or “hold less of”) real estate at a level comparable to that of December 2008 when the subprime mortgage market was collapsing.

The banking crisis rules the roost in terms of top “tail risk” concerns, although this has slightly abated from April. This is likely on account of the depositor rescue program which is now increasingly likely to be applicable on all failing regional banks.

Interestingly, while inflation also sees a slight step down from last month, worsening geopolitics causing an additional strain has seen a slight uptick. When tied with the idea of very low self-reported risk levels being assumed, this would mean that inflation-related measures are generally being locked into place. One such measure: an increasing focus on “Big Tech”.

Big Tech are increasingly being viewed as the equivalent of “Treasury Stocks”, i.e. they represent companies that are far too ubiquitous and central to technology and business to completely vanish or tank in a short period of time. In fact, being bearish on American banks and bullish on “Big Tech” stocks are both some of the most overcrowded positions held by the survey’s respondents.

Also interesting is the retreat from EM (“Emerging Market”) stocks. For decades now, investing into EM stocks simply meant a dominant investment in Chinese equities. This outlook is seeing a net change: expectations of the Chinese economy maintaining growth is now being deemed unlikely, despite a brief bump due to post-COVID reopening news.

Also persistent (and rising) is the net belief that the recession is inevitable, regardless of the fact that the U.S. Federal Reserve and Treasury are holding off on calling it.

Overall, growth expectations are treading lows not seen since the GFC:

With data reminiscent of the GFC presenting itself in such stark contrast, along with the added pressure of geopolitical risks on the global supply chains – particularly in the Western Hemisphere – it would serve to be cautious with fuzzy growth narratives that run counter to the data.

For investors looking for tactical trading opportunities, there are a number of Exchange-Traded Products (ETPs) that could be considered. For instance, when it comes to the S&P 500, there are ETPs on both the upside as well as the downside. Similar opportunities are available in the upside and the downside of the Chinese market. For banking services, there are products catering to the upside and the downside as well.

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

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Violeta Todorova

Senior Research

Violeta è entrata a far parte di Leverage Shares nel settembre 2022. È responsabile dello svolgimento di analisi tecniche e ricerche macroeconomiche ed azionarie, fornendo pregiate informazioni per aiutare a definire le strategie di investimento per i clienti.

Prima di cominciare con LS, Violeta ha lavorato presso diverse società di investimento di alto profilo in Australia, come Tollhurst e Morgans Financial, dove ha trascorso gli ultimi 12 anni della sua carriera.

Violeta è un tecnico di mercato certificato dall’Australian Technical Analysts Association e ha conseguito un diploma post-laurea in finanza applicata e investimenti presso Kaplan Professional (FINSIA), Australia, dove è stata docente per diversi anni.

Julian Manoilov

Marketing Lead

Julian è entrato a far parte di Leverage Shares nel 2018 come parte della prima espansione della società in Europa orientale. È responsabile della progettazione di strategie di marketing e della promozione della notorietà del marchio.

Oktay Kavrak

Head of Communications and Strategy

Oktay è entrato a far parte di Leverage Shares alla fine del 2019. È responsabile della crescita aziendale, mantenendo relazioni chiave e sviluppando attività di vendita nei mercati di lingua inglese.

È entrato in LS da UniCredit, dove è stato responsabile delle relazioni aziendali per le multinazionali. La sua precedente esperienza è in finanza aziendale e amministrazione di fondi in società come IBM Bulgaria e DeGiro / FundShare.

Oktay ha conseguito una laurea in Finanza e contabilità ed un certificato post-laurea in Imprenditoria presso il Babson College. Ha ottenuto anche la certificazione CFA.

Sandeep Rao

Research
Sandeep è entrato a far parte di Leverage Shares nel settembre 2020. È responsabile della ricerca sulle linee di prodotto esistenti e nuove, su asset class e strategie, con particolare riguardo all’analisi degli eventi attuali ed i loro sviluppi. Sandeep ha una lunga esperienza nei mercati finanziari. Iniziata in un hedge fund di Chicago come ingegnere finanziario, la sua carriera è proseguita in numerose società ed organizzazioni, nel corso di 8 anni – da Barclays (Capital’s Prime Services Division) al più recente Index Research Team di Nasdaq. Sandeep detiene un M.S. in Finanza ed un MBA all’Illinois Institute of Technology di Chicago.