(Kitco News) Fears of slower growth across the globe have investors amassing cash piles, with holdings rising to the highest levels in two decades, according to the latest Bank of America Corp. fund manager survey.
Optimism has reached an all-time low as investors with $872 billion under management reported being the most underweight equities since May 2020. The results of the BofA's survey showed investors net 13% underweight, from 6% overweight in the April survey.
Expectations around future growth were also weak, while rate hike estimates rose in May, with investors projecting 7.9 hikes, up from 7.4 in April, BofA said.
The survey pointed out that fund managers were "extremely bearish" in May, with cash levels among investors jumping to the highest level since September 2001. Cash holdings increased to 6.1% from 5.5% reported in the previous month's survey.
The two most significant risks identified were hawkish central banks at 31% and global recession at 27%. Inflation risk was lower at 18%, and war fears declined to 10%.
The most popular areas to invest in were commodities, healthcare, and consumer staples, with investors turning away from technology, Europe, and emerging markets.
The most crowded trades were long oil/commodities and short U.S. Treasuries.
The survey results coincided with a massive selloff in the equity space, which posted the worst weekly loss since the global financial crisis last week.
BofA strategist Michael Hartnett noted that stocks are yet to find their bottom, adding that the market hasn't yet reached "full capitulation."
