What's happened
Investor sentiment among fund managers has reached a 30-year low, driven by fears of recession and stagflation due to President Trump's fluctuating tariff policies. A recent Bank of America survey indicates a significant shift towards gold and cash as safe-haven assets, while allocations to U.S. equities decline sharply.
What's behind the headline?
Key Insights
- Investor Sentiment: The Bank of America survey reveals that 82% of fund managers expect a weaker economy this year, marking a significant shift in outlook.
- Asset Allocation: There is a notable move away from traditional equities, particularly in the tech sector, with a 17% underweight position reported. Instead, investors are flocking to gold, with 42% believing it will be the best-performing asset in 2025.
- Cash Holdings: Institutional investors are increasing cash levels to 4.8%, indicating a cautious approach amidst market volatility. This is the highest cash allocation since November 2022, reflecting extreme pessimism.
- Stagflation Fears: With 90% of fund managers anticipating stagflation, the economic outlook remains grim. The potential for a hard landing is a significant concern, as nearly half of the respondents expect this scenario.
- Market Volatility: The ongoing trade tensions and tariff negotiations contribute to heightened market uncertainty, making it difficult for investors to make informed decisions about their portfolios.
What the papers say
According to Business Insider UK, the latest Bank of America survey indicates that investor expectations for global growth have hit a 30-year low, with many fund managers shifting their focus to gold as a safe-haven asset. The Independent highlights that sentiment among fund managers is at its fifth lowest on record, with fears of stagflation and recession dominating discussions. The volatility in the market is exacerbated by Trump's inconsistent tariff policies, which have left investors uncertain about the future. As noted by The Independent, BlackRock's CEO warns of a potential recession, emphasizing the need for clarity in the market. Overall, the consensus among financial analysts is that the current environment is fraught with risk, leading to a cautious approach from investors.
How we got here
The current market turmoil stems from President Trump's recent tariff announcements, which have caused significant volatility. The Bank of America Fund Manager Survey highlights growing concerns about the economic impact of these tariffs, with many investors fearing a recession and rising inflation.
Go deeper
- What are the implications of the tariff policies?
- How should investors adjust their strategies now?
- What assets are considered safe in this market?
Common question
-
What are the latest predictions for global trade in 2025?
As global trade faces unprecedented challenges, understanding the latest predictions is crucial for businesses and investors alike. With escalating tariffs and ongoing tensions, particularly between the US and China, many are left wondering how these factors will shape the future of international commerce. Below, we explore key questions surrounding global trade dynamics and their implications.
-
What is Causing Low Investor Sentiment in 2025?
Investor sentiment has plummeted to its fifth lowest level on record, raising concerns about the future of the global economy. With fears of stagflation and recession looming, many are left wondering what factors are driving this pessimism and what it means for their investments. Below, we explore key questions surrounding this economic uncertainty.
More on these topics
-
The United States of America, commonly known as the United States or America, is a country mostly located in central North America, between Canada and Mexico.
-
Donald John Trump is an American politician, media personality, and businessman who served as the 45th president of the United States from 2017 to 2021.
-
The Bank of America Corporation is an American multinational investment bank and financial services company headquartered in Charlotte, with central hubs in New York City, London, Hong Kong, Dallas, and Toronto.