Investing.com -- Investor sentiment has deteriorated to its most bearish point in three decades, according to the latest BofA Global Fund Manager Survey (FMS).
A net 82% of respondents expect global economic growth to weaken, marking a 30-year high and the most pessimistic reading in the survey’s history. 42% of respondents believe a recession is likely.
The April edition of the survey, which covered 195 panellists managing $444 billion in assets, showed that investor positioning has shifted dramatically toward caution.
Cash levels surged to 4.8%, the biggest two-month jump since April 2020, while global equity allocation fell to its lowest level since July 2023.
Since February 26, allocation to U.S. equities dropped by a record 53 percentage points, a record 2-month drop, making investors net 36% underweight, the survey reveals.
According to BofA strategists led by Michael Hartnett, this is “the 5th most bearish FMS in past 25 years,” with sentiment nearing what BofA calls “peak fear” levels.
“FMS [is] max bearish on macro, [and] not quite max bearish on market,” the strategists noted.
The bank’s broadest sentiment measure fell to 1.8 in April from 3.8 in March, placing it at its lowest point since October 2023.
Amid growing recession fears, 49% of respondents now expect a “hard landing,” compared to just 11% a month earlier. Inflation expectations spiked as well, with 57% of respondents forecasting higher global CPI in the year ahead — the sharpest month-on-month increase since March 2022.
The FMS also signals a broad loss of confidence in U.S. economic leadership. “73% say ‘U.S. exceptionalism’ has peaked,” while outlooks for U.S. corporate profits and the dollar hit their most bearish levels since 2007 and 2006, respectively.
In terms of positioning, investors moved further into bonds, utilities, staples, and pharma stocks, while cutting exposure to cyclicals, industrials, and tech.
Highlighting the sense of market anxiety, the most crowded trade is now “long gold,” ending a two-year run for “long Magnificent 7,” while the top perceived tail risk — by a wide margin — is that a “trade war triggers global recession.”