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No Cash Left In Mutual Funds

Investors’ cash levels on a global scale have fallen to tantrum levels prior to 2013.

According to the February Bank of America survey of fund managers, cash levels in investment portfolios reached their lowest level since just before the taper tantrum crisis of 2013.

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Global stocks are climbing to consecutive all-time highs in 2021, central banks continue to support, and governments are pumping money into the system to accelerate economies after the damage caused by COVID-19. This causes mutual funds to take risks blindly.

“The only reason to be negative is … there is no reason to be negative,” Michael Hartnett, BofA’s chief investment strategist, told clients with the highest capital and commodity allocations in a decade.

The survey released Tuesday, covering 225 fund managers with $ 645 billion in assets, a net 91% of those surveyed expect a stronger economy, the highest in history.

Investors reflected their ability to heighten risk by lowering cash levels to 3.8%, the lowest since March 2013, just before the Fed began to reduce its bond purchases or start a new “taper tantrum”. indicating your intention to reduce it.

However, investors are listening to the repercussions of the 2013 event. They see a new tantrum as the second biggest “tail risk,” while for now they define the biggest risk as delays in introducing coronavirus vaccines.

Despite these latent issues in the background and huge gains in the markets, the BofA survey conducted February 5-11 found that only 13% of its respondents were concerned about the US stock market bubble. About 53% said the US equity markets were in the final stage of the bull market, while 27% saw it in the early stages.

In particular, a net 25% of investors surveyed said they were taking “higher than normal” risks, the highest in the survey’s history. The “long position in tech stocks” emerged as the “busiest trade”, followed by the “long position in bitcoin” and the “short position in US dollars”.

A similar survey by Deutsche Bank showed that investors agreed that there are many bubbles in financial markets. According to this survey, Bitcoin and US tech stocks are at the top of the bubble debate. The survey also showed that fears of “progressive tantrums” decreased. About 26% of those surveyed expected a tantrum-like move this year, compared with a third higher in January.

Source: Reuters

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