Fund Managers Fear Second Coronavirus Wave: BofA Survey

However, they did not expect the manufacturing Purchasing Managers' Index to rise above 50 before November. The latest reading showed the PMI at 41.5.

Net 10% of fund managers expected a lower global Consumer Price Index in the next 12 months.

Seventy-seven percent of investors said they expected below-trend growth and inflation in the global economy over the next 12 months, up one point from April, while 11% thought the global economy would experience above-trend growth and below-trend inflation, up six points from April.

Asked which structural shifts would characterize the post-coronavirus world, 68% of fund managers said supply chain reshoring, or localization; 44% said protectionism; 42% pointed to higher and new forms of taxation; and 24% said debt exemptions for the private and public sectors.

Fund managers' equity allocation rose 10 points month over month to net 16% underweight. Allocation to U.S. equities jumped nine points to net 24% overweight, the highest level since July 2015; the U.S. remained fund managers' most-favored region.

In May, bond allocation jumped 15 points to net 13% underweight, a level unseen since July 2009, BofA said.

Long U.S. tech and growth stocks were the most-crowded trade in May, according to 60% of investors. BofA noted that the last time this many investors expected value to underperform growth was December 2007.

Fourteen percent of respondents said long cash was the most crowded trade, 10% said long gold and 7% cited long U.S. dollar.

— Check out Reasons to Be Wary About the Stock Market Recovery on ThinkAdvisor.