Fund managers have put money into bonds and cut their allocations to commodities post mounting fears that China is heading for a hard landing, according to findings of the Bank of America (BofA) Merrill Lynch Fund Manager Survey.
Except for a Eurozone break-up, the so-called Chinese hard landing is now the second most feared tail-risk, being cited by one-quarter of fund managers, reveals the BofA Merrill Lynch Fund Manager Survey for May.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
The BofA Merrill Lynch Fund Manager Survey polled 177 asset allocators with combined assets under management of US$517 billion between 3 May and 9 May.
The survey reveals that a net 29% of asset allocators are underweight commodities – a rise from 11% reported in March, which was the lowest weighting to the asset class since December 2008.
A net 8% of fund managers invested in Japan, the Asia-Pacific rim and global emerging markets expect the Chinese economy, reversing from a net 9% expecting the economy to strengthen a month ago. This is the first time these fund managers have turned negative on the country in 14 months, according to the BofA Merrill Lynch survey.
BofA Merrill Lynch Global Research chief investment strategist Michael Hartnett said: "May’s Fund Manager Survey demonstrates a clear exit from China and assets connected to China – in the shape of commodities and emerging market equities. But it’s worth noting that investors are keeping faith in global growth."
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataAt the same time, managers have lowered their underweight to bonds. In April, a net 50% of allocators were underweight to bonds but that number eased to a net 38% in the latest poll.
Allocations to emerging markets also fell to two-year low, to 3% underweight in May.
