Fund manager sentiment has declined sharply in recent months, mirroring a decline in expectations for global growth and US stock performance. The Bank of America (BofA) analysts surveyed by chief investment strategist Michael Hartnett found that pessimism about the economy has spiked, with 44% of respondents now expecting a weaker global economy over the next 12 months.
The slowdown in fund manager optimism is largely attributed to President Donald Trump’s on-again, off-again tariff threats, which have fueled massive uncertainty about US trade policy. The survey found that 55% of fund managers cited a trade war-induced recession as their biggest “tail risk,” followed by inflation and concerns over the impact of Elon Musk’s Department of Government Efficiency (DOGE).
Despite the gloomy outlook, BofA analysts note that the speed and scale of the correction bode well for the market going forward. The average cash position of fund managers jumped 60 basis points to 4.1%, ending a contrarian “sell signal” that had initially been triggered in December.
Fund manager sentiment has been highly correlated with the performance of the S&P 500, and a recent survey found that investors are now rotating out of US stocks, going underweight by 23% compared to being overweight last month. However, BofA’s survey still suggests that investors expect the Fed to achieve a “soft landing,” or lower inflation without inducing a recession.
The recent news on reciprocal tariffs has also provided some relief for the market, with the S&P 500 rising 1.5% as of Monday afternoon.
Source: https://fortune.com/2025/03/24/growth-expectations-global-fund-managers-stocks-cash-warren-buffett