Investor confidence is nearing historic lows, with sentiment levels plummeting to the most bearish reading in three decades, as reported by the latest BofA Global Fund Manager Survey. This survey captures a wave of pessimism reshaping asset allocation strategies across global markets.

Key Findings from the April Survey

• 82% of respondents expect global growth to weaken—the worst reading in 30 years.

• 42% believe a recession is likely.

• 49% anticipate a “hard landing”, a sharp rise from 11% last month.

• Cash holdings surged to 4.8%, marking the largest two-month increase since the 2020 COVID crash.

• U.S. equities experienced a record 53 percentage point drop in allocation since late February, leading to a significant 36% net underweight.

Peak Fear, Yet Not Total Panic

Experts at BofA, led by Michael Hartnett, characterized this as the “5th most bearish reading in 25 years.” The sentiment index slid to 1.8, its lowest since October 2023, suggesting a narrative of “peak fear” emerging.

While macroeconomic predictions appear grim, market positioning hasn’t fully aligned, signifying that investors might be hedging but not entirely withdrawing from risk assets.

“U.S. Exceptionalism” Under Scrutiny

One notable insight is the growing perception of declining faith in U.S. economic leadership:

• 73% of fund managers regard “U.S. exceptionalism” as having peaked.

• Bearish sentiment toward U.S. corporate profits and the U.S. dollar remains at historic highs last seen in 2007 and 2006, respectively.

Shifts in Portfolio Allocations

Amid increasing risk-off sentiments, fund managers are redirecting resources into defensive sectors:

Overweight Sectors:

• Bonds

• Utilities

• Consumer Staples

• Pharmaceuticals

Underweight Sectors:

• Cyclicals

• Industrials

• Technology

The “long gold” trade has replaced the previous dominant “long Magnificent 7” tech trade, highlighting the surge in caution.

Track Market Impacts in Real-Time

Utilize these tools to monitor market fluctuations amid a bearish environment:

• entreprenerdly.com Ratios (TTM) API to track critical valuation metrics as sentiment affects corporate fundamentals.

• entreprenerdly.com Economics Calendar to stay ahead of crucial data releases that might shift market perspectives.

Final Word

With sentiment sitting at a three-decade low and asset allocation trends leaning towards defense, markets appear poised for turbulence ahead. Whether this signals a bottoming-out moment or the onset of a deeper correction remains uncertain; for now, caution reigns supreme.