Survey: Global fund managers' cash allocation rises to 4.3%, risk aversion hits a new high since the pandemic.

According to Mars Finance, a recent Bank of America global fund manager survey released on March 17th shows that amid Middle East geopolitical conflicts and rising inflation expectations, global asset managers are increasing their cash allocations at the fastest pace since the 2020 pandemic, indicating a significant decline in market risk appetite. The survey shows that the average cash holding ratio of surveyed fund managers rose from 3.4% in February to 4.3%, with overall investor sentiment falling to a near six-month low. Meanwhile, the net percentage of those optimistic about global economic growth dropped sharply from 39% to 7%. Regarding inflation expectations, 45% of respondents expect the global consumer price index (CPI) to continue rising over the next year. As a result, market expectations for a Federal Reserve interest rate cut have cooled significantly, with only 17% of fund managers currently expecting a rate cut this year, compared to 46% in February. Furthermore, the survey revealed that 34% of investors are overweight in commodities, the highest level since April 2022; 53% are overweight in emerging market equities, a new high since February 2021; and consumer discretionary equities have fallen to their lowest level since December 2022. The survey, led by Michael Hartnett, was conducted from March 6th to 12th, with 181 fund managers participating and managing approximately $529 billion in assets.