The June Bank of America survey also reveals commodities as the most-crowded trade
Global fund managers are confident that the current rise in inflation, seen in multiple economies including Canada, is temporary.
In the latest Bank of America Global Fund Manager survey for June 2021, almost three quarters of respondents said that they believe inflation is “transitory” with just 23% seeing it as permanent.
When inflation is rising, commodities trades generally increase, and this is happening now. Long commodities were named the most-crowded trade in the June survey, replacing Bitcoin which topped the previous month’s poll.
While fund managers are broadly in line with the Fed’s opinion that the inflation spike will pass, they are expecting the US central bank to begin tightening policy in the months ahead.
This is likely to include reducing its US$120 billion in monthly bond purchasing, with over half of respondents calling for this in August or September 2021.
Fund managers have cut their bond allocations to a three-year low while most believe the equity rally has further to run. Cash holdings fell to 3.9%.
Bitcoin bubble
Asked about Bitcoin, 81% of respondents said they felt there is a bubble despite easing of prices recently.
This was an increase from the 75% of global fund managers who said there was a Bitcoin bubble in May.
The volatility of Bitcoin has weakened its viability as a mainstream payment solution or store of wealth for many investors, although there are opportunities within the crypto fund space.
