A new Bank of America survey shows large fund managers slashing growth expectations for the first time in months amid coronavirus fears

• Large-fund managers' growth expectations declined in February as coronavirus dragged down sentiment.
• Managers still rank the outcome of the 2020 presidential election as the biggest tail risk facing markets.
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Large-fund managers surveyed by Bank of America slashed their expectations for global growth in February. That's the first time growth expectations have fallen since October, and a familiar culprit is to blame: coronavirus.

Fewer managers foresee promising global growth this month than did last month, the survey that was published Tuesday found. A net 18% of fund managers had positive growth expectations, versus 36% in January. That dip in sentiment comes from a deterioration in expectations surrounding Chinese growth, according to the survey, whose participants are mostly institutional, mutual, or investment or unit trusts.

China's gross domestic product growth forecast is at the lowest it's been since September 2015, Bank of America said. Negative sentiment comes as China combats the Wuhan coronavirus, a fast-spreading disease that has infected more than 73,000 and caused businesses within China to temporarily halt operations.

Still, coronavirus is not the headline weighing most in fund managers' list of market risks. Instead, just as they did in January, managers ranked the outcome of the 2020 presidential election as the biggest tail risk facing markets. The surveyed managers defined a risk as anything that would move an investment more than three standard deviations from its price.

Declining hope in the macroeconomic picture has not kept managers from betting on growth stocks. A net 6% of managers think growth stocks will outperform value stocks in the next year - that's the most positive overall reading in favor of growth since July 2008, and the biggest increase since December 2014.

Still, fund managers said for the second month running that US technology and growth trades are the most crowded in the marketplace.

The survey is conducted monthly and involved 221 panelists overall who managed $676 billion in assets.

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