The highly anticipated Bank of America fund manager survey has been published, and this December fund managers who participated in the survey are sweeping up risk assets. The asset managers have dropped cash for the first time in close to seven years, as levels are down 4%. Moreover, strategists at Bank of America Corp. now say the most crowded trades are “long tech,” “short USD,” and “long Bitcoin.”
Cash assets are under by 4%, according to the latest Bank of America’s fund manager survey published this week. Participants in Bank of America’s (Bofa) survey collectively oversee $535 billion in assets worldwide. Bofa’s survey shows that investors are very positive about the coronavirus vaccine bolstering the economy.
“Investor sentiment is bullish as vaccine hopes induce strong ‘buy the reopening’ trade,” explains the Bofa strategists led by Michael Hartnett. “We say sell the vaccine in the first quarter 2021.” The cash level decline is similar to the economic growth stage that took place after the 2008 sub-mortgage financial crisis, Bofa’s report also highlights.
“Recovery expectations have also surpassed prior recessions in both speed and magnitude,” the strategists stressed in the December Bofa fund manager survey.
Interestingly, the Bofa report also mentions the most crowded trades and one of them includes bitcoin (BTC). The survey shows that investor sentiment is long tech, short U.S. dollar, and long bitcoin. Roughly 85% of the surveyed fund managers believe that investment profits will accumulate more so during the next year.
BofA December Global Fund Manager Survey:
Crowded trades:
1) long tech (52%),
2) short USD (17%)
3) long Bitcoin (15%)Bias for USD remains to the downside, but timing is always important, and going into December liquidity trying to chase the USD lower seems risky pic.twitter.com/0puHHKkEhB
— Arno Venter (@ArnoVenter9) December 15, 2020
According to Danny Scott, CEO and cofounder of Coincorner, an Isle of Man-based crypto exchange and wallet provider, investors these days are looking for a safe haven from the massive government bailouts.
“Touching briefly on the unfortunate situation the world has suffered this year, the coronavirus crisis had the knock-on effect of causing a long-awaited financial crash in March,” Scott wrote in a note to investors. “This resulted in Government bailouts: the U.S. Federal Reserve printing $3 trillion (plus another $2 trillion on the way), the Bank of England likely printing towards £1 trillion and many more around the world following suit. Not to forget the introduction of negative interest rates which look to become the norm,” Scott added.
The Coincorner cofounder further wrote:
Although this may be necessary in their eyes to stimulate the economy and its future protection, this comes with a huge risk of inflation on a scale unseen in these territories before. Putting this into perspective, the Fed printed $3.9 trillion between 2008 and 2014 during the 2008 financial crisis, and they’ve already surpassed this in 2020 alone, with more likely to come. When it comes to financial uncertainty, people look for a safe haven and Bitcoin is becoming this.
Bofa strategists and Michael Hartnett detailed in the December survey that ever since fund managers exited cash positions, they jumped on emerging-markets and technology stocks. 42% of the surveyed managers said it was the vaccine optimism that will spur economic recovery in Q2 2021. 76% of the money managers think the recovery will be far greater, according to the Bofa survey data.
Of course, bitcoiners and crypto proponents appreciated the fact that among the most crowded trades in 2020 was the call to “long bitcoin.”
“Bofa fund manager survey’s top trades: #1 long Nasdaq; #2 short US [dollar] and close #3 long bitcoin,” tweeted one individual. “So professional investors are long bitcoin yet [the U.S. Securities and Exchange Commission] SEC can’t approve an [exchange-traded fund] ETF, which forces retail to pay [net-asset-value] NAV premium for GBTC,” the individual Asi De Silva added.
It’s not the first time bitcoin (BTC) has been named the most crowded investment of the year. The crypto asset also captured that position back in 2017 in Merrill Lynch’s December global fund manager survey.
What do you think about the three most crowded investments being long tech, short USD, and long bitcoin in the latest Bofa fund manager survey? Let us know what you think about this subject in the comments section below.
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