Expectations of a soft landing rose among among investors from 76% in August to 79% in September, according the Bank of America Global Fund Manager Survey.
The September expectations of a soft landing include the largest proportion of investors so far this year. Those predicting a hard landing have also slightly dropped off from August, now including 11% of those surveyed, down from 13%. This has fallen significantly from the same time last year, when 21% of investors anticipated a hard landing.
In addition, over half of investors believe there will not be a recession in the US within the next 18 months.
Michael Hartnett, investment strategist for Bank of America, said: “Macro pessimism was centred on China in the September Fund Manager Survey… China growth expectations fell to a record low with net 18% expecting a weaker Chinese economy (most in 3-year history).
“In contrast, US growth outlook improved slightly in September with net 51% expecting a weaker US economy next 12 months, down from net 56% in August.”
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As market sentiment looks slightly more sunny, surveyed investors took a small chunk from cash investments, from an averaged 4.3% of assets under management to 4.2%. Yet, a net 11% of those surveyed say they remain overweight in cash. Investors also remain overweight in bonds, with September marking the largest overweight since December 2023, at net 11%.
The sentiment movements have swayed Bank of America to mark commodities as a contrarian market play. Currently, allocation to commodities sits at a seven-year low among those surveyed. In the last four months, allocation to commodities has dropped 24 percentage points.
September’s global survey included 206 respondents, with 36 CIOs, 93 portfolio managers, 64 asset allocators, strategists, and economists, and 13 uncategorised. Of the group, 91 ran mutual funds and 58 ran institutional funds, with the rest in hedge funds, proprietary trading desks, or others. The average investment time horizon sat at 7.3 months.
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