Investor cash levels rise to 5.8%, BofA survey shows

Cash levels have jumped from 5.5% to 5.8% between October 7 and October 13, 2016, reveals the global fund manager survey (FMS) conducted by Bank of America Merrill Lynch. Global growth expectations during the same period has fallen to 19% from 9-month high reading of 26% last month.|

The survey shows the October rotation towards banks, commodities, emerging markets (EM) equities and the euro. At the other end of the spectrum, the October rotation was away from bonds, real estate investment trust (REITs), telecommunications and healthcare.

Long high-quality stocks, long US/EU IG corporate bonds and minimum volatility strategies, being the top 3 most crowded trades are all at risk from bond crash. The top three tail risks include the breakup of the European Union (EU), bond crash, Republican winning the upcoming American elections.

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According to the survey, allocation to EM equities has risen to the highest OW in 3.5 years.