A recent Bank of America survey of global fund managers indicates a significant shift towards gold. The October survey revealed that holding a ‘long gold’ position has become the most crowded trade, capturing 43 per cent of fund managers’ attention. This is followed by the ‘magnificent seven’ stocks at 39 per cent, and a ‘short US dollar’ position at 8 per cent.
Regarding gold allocation, the survey found a diverse range of positions. Thirty-nine per cent of fund managers indicated their current gold position is nearest to 0 per cent. Nineteen per cent have an allocation of around 2 per cent, while 16 per cent have approximately 4 per cent allocated to gold. The weighted average allocation to gold stands at just 2.4 per cent, increasing to 4.2 per cent among investors who are specifically allocated to gold.
Historically, market leadership has shifted since 2013. This includes high-yielding debt, long US dollar, quality stocks, tech, emerging markets, US Treasuries, US tech and growth stocks, Bitcoin, commodities, the ‘magnificent seven’, gold, and short US dollar.
The survey also identified key areas of risk. The top tail risk is now perceived to be an ‘AI equity bubble’, with 33 per cent of respondents highlighting this concern in October, up from 11 per cent the previous month. The second leading tail risk, ‘second wave of inflation’, was relatively steady at 27 per cent. Investor concerns have evolved since 2011 from Eurozone debt and Chinese growth to geopolitics, US dollar debasement, and inflation.
