Fund managers boosted equity allocations, but tech sees little love: BofA January survey

World currencies

In January, global fund managers increased their allocation to equities compared with December, but rotated out of technology and U.S. stocks, according to the Bank of America fund manager survey. 

A net 55 percent of the respondents said they were overweight on equities in January, up 9 percentage points from December, around 1.1 standard deviations above the long-term average, the survey said. 

The tech sector saw no love, however, with only 1 percent of managers a net overweight, down 20 percentage points on-month, at the lowest level since December 2008, as investors pointed to concerns about the risk of central bank tightening, BofA said. 

Around 39 percent of fund managers said being long U.S. tech stocks was the most-crowded trade, the survey said.

Banks and commodities were likely favored as a re-opening play as Covid-related restrictions ease, the survey found.

Banks were darlings, with the net overweight allocation rising to 41 percent, up 21 percentage points on-month, nearing highs set in October 2017, the survey found.

Commodities were also a favorite, with the net overweight at 31 percent, up 12 percentage points on-month, to the highest level since the survey began, BofA said. 

Managers were bullish on the European Union, with a net 35 percent overweight, up 4 percentage points on-month to the highest since September 2021, likely as a relative re-opening play, although they remained bearish on the U.K., with a net 13 percent underweight, down 2 percentage points on-month, the survey found.

Allocations to the U.S. declined, with only net 5 percent of managers surveyed overweight, down 13 percentage points on-month, the lowest since January 2021, BofA said. 

Bond allocations withered, with a net 77 percent of managers underweight in January, down 14 percentage points on-month, around 1.7 standard deviations below the long-term average, the survey said. 

The investment bank had 329 respondents to its global questions, with around US$1.05 trillion in assets under management in aggregate.