The big short menu1/3/2024 The tech-heavy Nasdaq Composite Index has gained almost 8 per cent since the middle of May, as Facebook (up 10 per cent over the same period), Amazon (up 7 per cent), Alphabet (10 per cent) and Apple (6 per cent) have pushed higher.Ī similar story is playing out in Australia, where WiseTech Global and Afterpay are up 22 per cent in the last month, Xero has risen 16.7 per cent and Nearmap is up 10 per cent. This accords with what we are seeing in markets, whereas long-term bond yields ignore inflation talk and move lower – the US 10-year Treasuries are sitting around 1.5 per cent, having peaked at 1.774 per cent on March 30 – tech stocks have quietly been making ground. It appears portfolios are already being tweaked to these settings.īanks remains the biggest sector overweight of the survey, while fund managers are also positioning in what BofA calls chunky cyclicals – the materials sector, industrials and stocks in Britain and the Eurozone.īut the biggest jump in the survey in terms of net allocation was in tech stocks, which leapt from 11 per cent in May to 22 per cent in June. And even if we fell back to that level – which would be a bit above 6600 points, compared with the current level of 7388 points – investors would still be sitting on a 12-month return of 11.8 per cent.Īsked what sectors perform best over the next four years, investors suggested a barbell approach of value stocks and tech stocks. In local terms, the red-hot run on the ASX 200 in the past two months means that a 10 per cent fall would only take us back to levels seen at the start of February. If a taper tantrum does occur, fund managers don’t expect it will cause too much pain, with 57 per cent of those surveyed saying any correction will be less than 10 per cent. Nothing seems to be able to shake the confidence of global fund managers right now. Despite an inflation reading of 5 per cent in the US last week, 72 per cent of respondents told BofA that inflation is transitory, pushed higher by short-term issues such as shortages of new and used cars.Īnd while 63 per cent of fundies expect the Federal Reserve will start to signal tapering of its aggressive quantitative easing program in August or September, and many investors see a taper tantrum as a distinct tail risk, expectations that the yield curve will steepen now sit at the lowest level since August 2020. Not that anyone’s too worried about the latter.
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