Rotation has taken a firm hold on the investment thinking of big global managers, according to the Bank of America/Merrill Lynch survey for November.
The survey shows a net 24% of fund managers thinking that value stocks will outperform growth stocks, and a net 21% saying that small-caps will outperform large-cap stocks.
A net 91% say the economy will be stronger in the next 12 months. That’s in the face of the surging infection numbers and deaths in the US and across Europe.
Fund managers though are ignoring this grim reality (expecting vaccines to sort everything out) and positioning themselves with a big move into small-cap and emerging markets. They are underweight cash and staples.
News that two coronavirus vaccines have been effective (95%, Pfizer said on Wednesday for its product) — as well as the US election result (and despite Donald Trump’s refusal to accept the outcome) — have seen a big switch into energy, financial , and travel stocks.
The technology-heavy Nasdaq Composite is still registering gains — it ended at a record on Monday — but no longer is leading the market as investors sell down megatechs (as Warren Buffett did in the September quarter, disposing of 37 million Apple shares to help fund a near $US8 billion move into pharma and healthcare stocks).
A total of 216 panelists running $US573 billion in assets under management participated in the survey, which ended on November 12, which was after drugmaker Pfizer announced its vaccine effectiveness but before biotech Moderna did.