BAML: Investor growth optimism has jumped the most in 20 years, spurring a rush into equities to calm 'FOMO'

trader happyGetty Images / Spencer Platt

  • Global growth optimism jumped the most in 20 years to an 18-month high in the November Global Fund Manager Survey from Bank of America Merrill Lynch.
  • Now, investors are piling back into equities and out of safer assets like bonds and cash to capture new market highs, according to the survey.
  • Fifty-two percent of fund managers surveyed said that equities will be the best-performing asset class in 2020, followed by commodities and cash.
  • Read more on Business Insider.

A recent wave of optimism has investors piling back into the stock market for fear of missing out on new highs, according to Bank of America Merrill Lynch's November Global Fund Manager survey.

After months of investor worry and recession fears, global growth optimism soared to 6% from -37% in November, an 18-month high and the biggest jump in 20 years, according to the Tuesday survey. A total of 178 managers with $574 assets under management contributed to the survey.

"The bulls are back," wrote a team of Bank of America Merrill Lynch analysts led by Michael Hartnett. "Global recession concerns vanish and 'Fear of Missing Out' prompts wave of optimism and jump in exposure to equities and cyclicals."

Positive trade news sent the S&P 500 to record highs at the end of October and beginning of November, reigniting investor appetite for riskier assets such as value over growth stocks, equities, and banks, according to the survey.

Screen Shot 2019 11 12 at 9.21.35 AMBofA Merrill Lynch Global Fund Manager Survey

At the same time, investors have sold off safe-haven assets such as bonds, ending the yield curve inversion between the 10-year US Treasury and the three-month Treasury note. They've also rotated out of cash, bringing cash levels to 4.2% from 5%, the biggest monthly drop since President Trump was elected in November 2016 and a six-year low, according to the survey.

Baml fomoBank of America Merrill Lynch

Still, many of the same worries remain. The trade war is still the No. 1 tail risk to investors, and has been a top concern for 19 of the last 21 surveys.

But going forward, 52% of investors said that equities will be the best-performing asset class in 2020, followed by 21% who said commodities, and 10% who said cash. Fund managers boosted their forecast for the S&P 500 to 3,246, which is 5.2% above Monday's close.

Get the latest Bank of America stock price here.
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