Fund Managers Are Becoming Less Bearish

Fund managers are more optimistic on the economy now than late last year

Bank of America ATM

Scott Olson / Staff / Getty Images

Fund managers are still bearish, but “a lot less bearish” about the economy this month than during the fourth quarter of last year, according to research by Bank of America.

The bank’s Global Fund Manager Survey found 68% anticipated a recession, down from the recent peak of 77% in November, which was the most since the early days of the COVID-19 outbreak.

In addition, while a net 50% of respondents expected a weaker global economy over the next 12 months, that was the most optimistic they have been about growth prospects in the past year. 

The bank also noted the “‘rate shock’ is over,” in a reversal of fund managers' earlier outlook on where short-term interest rates are heading. The survey indicated a majority now believes those rates will be lower, as compared to September when 78% anticipated they’d be higher, with just 14% predicting lower rates. The respondents projected the federal funds rate would peak at 5% in the second quarter and reach a “restrictive” level where Fed policymakers could stop boosting borrowing costs to fight inflation.

Investment Choices

Fund managers expect an average target of 3,892 for the S&P 500 at the end of 2023, down about 2.7% from its current level. They reported their biggest increases in month-to-month investment allocations were in utilities, the eurozone, emerging markets, and industrials. They said they rotated out of the U.S., equities, health care, and tech.

Fund Managers' Recession Expectations; Jan. 2023 BofA Survey

BofA Global Research

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. Bank of America. "Global Fund Manager Survey: January 2023"

Take the Next Step to Invest
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.