The latest survey by the Bank of America (BofA) found fund managers were least bullish since October 2020 as global growth expectations turned negative on concerns over inflation and China. This is the first time that global growth expectations have turned negative since April 2020.

Of the respondents, a net 6 percent expected global growth to weaken over the next 12 months even as cash levels jumped to a 12-month high, the BofA Global Fund Manager Survey in October showed. The net total represents the percentage of those surveyed expecting the economy to weaken minus the percentage of those expecting it to strengthen.

About 15 percent believe profit growth would slow down with margin outlook standing at its worst level since May 2020.

Predictions of ‘boom’ fell to 61 percent, while that of ‘stagflation’ increased 34 percent.

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The survey, however, showed allocations to stock remained high at 50 per cent, while a net 28 percent increased allocation in commodities.

“Allocation to bonds slumped to all-time low,” Michael Hartnett, the BofA Chief Investment Strategist, wrote.

While 48 percent of the respondents believe inflation is the biggest tail risk, 23 percent worry about China and 3 percent are concerned about COVID-19.

Other top tail risks mentioned in the survey were tapering of the stimulus programme by the US Federal Reserve and US’s fiscal policy.

Investors want to cut their exposure in emerging markets in the next 12 months.

Compared to healthcare and staples, banks and energy sectors held out more promise. Globally, banks were the most-preferred sector, with the highest overweight since May 18.

The survey was conducted between October 8 and 14 on 430 managers with $1.3 trillion assets under management.

(Edited by : Shoma Bhattacharjee)