Going long on gold most crowded trade globally, says BofA Securities survey

Likely extended on gold is the second most crowded trade among the world fund managers with 23 for each cent of people surveyed bullish on the yellow metallic, suggest the conclusions of BofA Securities August Fund Manager Survey (FMS) launched on August 18. Hence significantly in calendar year 2020 (CY20), gold costs have moved up nearly 30 for each cent and 38 for each cent in the previous a single year, data from Globe Gold Council demonstrate.

Likely extended on US engineering shares topped was the most crowded trade among the world fund managers in August with fifty nine for each cent of people surveyed globally bullish on this asset class. Shockingly, 31 for each cent of fund managers surveyed by BofA Securities consider gold is overvalued. Amid people surveyed, 46 for each cent considered fairness markets are in a bull period, while a net 79 for each cent assume a more robust world economic system over the following year.

The survey was carried out from August seven to thirteen, 2020. An all round complete of 203 panelists with $518 billion worthy of of property beneath management (AUM) participated in the survey. 181 individuals with $489 billion AUM responded to the World wide FMS inquiries and eighty four individuals with $one hundred forty four billion AUM responded to the Regional FMS inquiries.

“Asset allocation is stubbornly skewed towards US development shares but August FMS shows ‘green shoots’ for ‘inflation assets’…rotation to Europe and rising industry shares, banking companies, smaller-cap and price shares. August FMS shows buyers V-shape recovery expectations are very low at 17 for each cent when compared to 37 for each cent that assume world financial recovery to be W-shape or U-shape (31 for each cent),” BofA Securities reported.

Net fifty seven for each cent of FMS buyers, in accordance to BofA Securities, nevertheless want corporations to boost harmony sheets not increase capex. “Inflation expectations have amplified 15 proportion factors (ppt) in August over July, with net fifty two for each cent of FMS buyers anticipating bigger world CPI in the following twelve months,” BofA Securities reported.

The dominant worries of buyers because 2011, in accordance to BofA Securities, have been Eurozone debt & potential breakdown Chinese development populism, quantitative tightening & trade wars now world coronavirus.

A second wave of Covid-19 dominates the fear quotient with 35 for each cent of FMS buyers indicating it is the major tail risk, adopted by US-China trade war, US election and a credit history occasion that can spook world money markets.