Fund Managers at Highest Cash Levels Since 9/11: BofA Survey

Here's how fund managers saw economic recovery from the coronavirus shock shaping up:

• U-shaped: 52%
• W-shaped: 22%
• V-shaped: 15%
• L-shaped: 7%
• Other: 3%

Seventy-nine percent of fund managers surveyed said they wanted corporations to improve their balance sheets, the highest demand level in 20 years, according to BofA. At the same time, a record low net 5% of investors thought corporates should return cash to shareholders via buybacks, dividends or mergers and acquisitions.

Fund managers' equity allocation plunged 29 points month over month to net 27% underweight, the lowest since March 2009. Allocations to U.S. equities jumped 12 points to net 15% overweight, making the U.S. fund managers' most preferred region.

Allocations to emerging markets equities — for five months the most-favored region — fell 11 points to net 6% overweight, the lowest level since October 2018.

Investors' bond allocations held steady at 28%, while real estate fell eight points to 5% underweight and commodities fell three points to 9% underweight.

Asked what they considered the biggest tail risk, 57% of fund managers cited a second wave of COVID-19. Thirty percent worried about a systemic credit event and 9% about a V-shaped recovery.

Only 2% mentioned the outcome of the November presidential election.

Long U.S. Treasuries was the most-crowded trade in April, according to 31% of investors in the survey. Twenty percent cited long cash, 18% long U.S. dollar and 17% long U.S. tech and growth stocks.

— Related on ThinkAdvisor:

• What Shape Will the Economic Recovery Take?
• 18 Months of Rolling Shutdowns Likely: Fed's Kashkari
• Business Economists See First-Half Recession, Second-Half Rebound