Tuesday, February 12, 2013

Fund Managers' Current Asset Allocation - February

The latest BAML survey of global fund managers continues to show high levels of risk-on positioning with low levels of cash (3.8%) and the highest global exposure to banks since early 2007.
  1. “The continued high level of optimism is a concern and markets may be vulnerable to bad news, but valuation support suggests any correction should be short and shallow" says BAML
  2. Cash balances remain very low at 3.8% (same as January, vs 4.1% in December 2012). This is still lowest since February 2011. Typical range is 3.5-5%.
  3. Equity allocations - a net 51% are overweight global equities, same as January (and the highest since February 2011). It was 35% in December 2012.
  4. $EEM remains the most favored region (overweight 43% vs 40% in January) 
    1. Followed by Europe (overweight 8% vs 15% in January) and 
    2. US (underweight 3% in January)
    3. Overweight Japan by 7% vs 3% in January and underweight 20% in December.
  5. A net 6% globally are overweight banks, the highest since February 2007 (vs overweight 3% in January and net 25% underweight a year ago). In the US, investors are the most overweight banks (25%) in the history of the survey ($XLF)
    1. Holdings in defensive pharmaceutical (the top choice) and consumer-staples companies increased
    2. Energy and materials reduced.  
    3. Technology companies cut to the lowest level since 2009. 
    4. Utilities and telecoms (defensives) allocations at their lowest since 2004.
  6. 82% of fund mgrs say bonds are overvalued. Net 47% are underweight (53% in January, which was the lowest weighting since May 2011) ($TLT)
  7. Net 39% - highest level in 24 months (vs 29% in January) - forecast profits worldwide will improve in next 12 months
  8. 59% expect global economy to strengthen next 12 month, same as January and still the highest optimism since Apr 2010