WORLDWIDE - Investors are displaying a record level of optimism over the possibility of Federal Reserve rate cuts, according to a recent Bank of America survey. The survey, which included fund managers overseeing assets worth $669 billion, revealed a shift in investment sentiment with a strong consensus expecting a decrease in short-term rates within the next twelve months. This optimism has led to an increase in cash holdings to 4.8%, as fund managers prepare for potential market volatility.
The investment landscape is seeing notable trends, with a pivot towards commodities, cash, and real estate, seen as hedges against expected dips in bond yields. Healthcare and technology sectors are attracting significant investments, while UK equities are being approached with caution. Despite a change in focus from global dynamics to concerns over China's economic slowdown, bonds and the US economy are historically overweight in investment portfolios.
Confidence among fund managers is on the rise, with over two-fifths not anticipating a recession in 2024. Geopolitical instability has emerged as a new area of concern, influencing investment decisions. Liquid asset reserves have reached their lowest point since spring 2021, signaling a move towards more aggressive stock market investments, which have hit their highest level since early 2022. While bond positions have seen a reduction, they still remain above the neutral threshold, with a preference for investments in real estate trusts, staple goods sectors, and raw materials.
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