Commodities have surpassed Bitcoin to become the most crowded trade, as per 26% of respondents in the latest global fund manager survey by Bofa Securities. The second spot is shared by Bitcoin and technology stocks with equal number of votes. They are followed by long ESG, short US Treasuries and long euro.
The survey report pointed out that prior “peaks” in crowded trades such as those of technology stocks in September 2020 and September 2018, US Treasuries in March 2020 and US dollar in January 2017 and February 2015, were associated with relative tops.
Commodities have been in the spotlight in the recent past given the massive rally in prices of some base metals such as copper, and steel. The surge in global commodity prices was triggered by reopening of the world economy and aggressive imports by China for its infrastructure development and transition to electric vehicles. As for oil prices, they have risen 50% so far in this calendar year and continue to head north aided by improving demand. Some experts are of the view that commodities are in a super cycle phase. On the other hand, Bitcoin saw a swift fall from glory in recent weeks, correcting sharply from its peaks.
Not just base and industrial metals, prices of agricultural commodities food and non-food as well as precious metals have also been on an upswing. With that, stock market investors are increasingly becoming wary of a higher-than-anticipated rise in inflation. This would mean a reversal in the ultra accommodative monetary policy stance of global central banks, which could weigh on the liquidity-driven equities.
Little wonder then that inflation and a taper tantrum are biggest tail risks that global fund managers see to their portfolios.
According to the survey, 63% of the respondents expect a signal on tapering bond purchases by the US Federal Reserve in August or September, with 38% seeing it coming at the annual Jackson Hole summit in August. That said, 72% of the respondents believe that inflation is transitory. This view is in-line with that of the US Fed on inflation.
This survey covered 224 panelists with $667 billion under management, and was conducted during 4-10 June.
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