The newly released 2024 BofA Global Wealth & Investment Management Survey, conducted from January 31 to February 14 this year, showsFinancial advisers expect the Fed to cut interest rates by 3For the first time, and the outlook on the U.S. economy has completely reversed from last year, more than half of financial advisers believe that the U.S. economy can achieve a soft landing.
In terms of asset allocation, respondentsBullish sentiment in U.S. stocks is the highest in the survey, the enthusiasm for non-US stocks, especially European stocks, except for Japanese stocks, has decreased. Bonds and cash are still favored, but ** are the least favored.
Most financial advisors believe that geopolitics and debt are the biggest risks to the market. The geopolitical ranking has risen to first place from third place last year.
Respondents are markedly optimistic about the U.S. economy. Only 4 percent of the 240 financial advisors surveyed expect the U.S. to fall into recession this year, down sharply from 85 percent last year.
In addition, more than half (51%) of the respondents expect the U.S. economy to achieve moderate growth + declining inflation (soft landing), 31% of respondents even expect to achieve high GDP growth + declining inflation, and only 14% expect inflation to accelerate this year.
Financial advisers are also more pessimistic about the outlook for interest rates than the market average. On average, respondents expect the Fed to cut interest rates by 31 time. In comparison, at the time of the survey (late January to mid-February), the market was expecting five rate cuts.
However, the current swap contract shows that market expectations of rate cuts have converged to three rate cuts totalling 75 basis points, in line with the views of the financial advisors surveyed.
On average, respondents allocated 59% of their assets to**, although bond and cash allocations were also high, resulting in a lower position than the 2017-22 average.
On a scale of 1 (extremely bearish) to 10 (extremely bullish), respondents' sentiment score for the 12-month return was 75, slightly higher than last year's 73, which is the highest value in the previous surveys of Bank of America; The sentiment score for the 3-month return is 61, the highest level since 2021.
Seventy-seven percent of financial advisors believe the bull market will continue beyond 2024, while only 1 percent believe the bull market is over.
The most favored market is the United States**. Eighty-one percent of respondents are net long on U.S. stocks, the highest level since the first year of the 2017 survey. 22% of respondents are bearish on European equities, the first time since 2019 that financial advisors are net bearish on Europe.
Another 34% of respondents are net bullish on Japan**, the highest level since 2018.
In terms of allocation, respondents continue to be more bullish on value stocks than growth stocks.
Forty-nine percent of financial advisors said they preferred value stocks, while 31 percent favored growth stocks. But the gap between the two has narrowed significantly, with 78% of respondents preferring value stocks and only 12% favoring growth stocks last year.
While confidence in the near-term outlook is low, financial advisors expect value stocks to outperform others** in the medium to long term.
However, while they favor value stocks, their views on the outlook for big tech stocks are divided. Fifty percent of respondents expect big tech stocks to outperform the S&P 500 this year, while another 50 percent say the opposite.
In terms of market capitalization style, financial advisors are more bullish on ** stocks and small-cap stocks rather than mid-cap stocks. Sixty-seven percent and 65 percent of respondents were net bullish on ** and small-cap stocks, respectively, while only 54% were on mid-cap stocks.
The survey also shows that the top five most popular financial advisors** are all constituent stocks of the "Seven Sisters" of technology.
Among the top three heavy stocks of respondents, 53% have Apple, followed by Microsoft, which has risen sharply to 50% from 28% last year, while Nvidia is in third place, jumping sharply from 2% last year to 21% this year, Amazon 18% and Google 11% again, and Mobil, which was in third place last year, has fallen to sixth place this year.
In addition, overall, investment advisers** exposure increased, while passive exposure decreased.
Respondents increased their ** exposure to 41%, up 3 percentage points from last year and the highest level since 2017. ETF passive exposure fell 2 percentage points to 35%.
According to the survey, financial advisers' bond allocations remain elevated, falling to 26% from 27% last year, but still higher than 2021-22 levels.
When asked how they would change their asset allocation in the future, 35% of respondents said they were shifting to bonds, similar to the proportion that did** (36%). Last year, 39% of respondents said they were switching to bonds, compared to just 18%.
In addition, cash is also popular, with cash returns reaching 7% since the end of 2021, driven by the Federal Reserve's interest rate hikes. Respondents' current cash allocation ratio remains at a high level of 10%, which is basically the same as last year.
This is the third consecutive year that financial advisers surveyed by BofA have increased their cash allocations, but if the Fed subsequently cuts interest rates, cash allocations could shift back to dividend stocks.
And, while respondents reported an increase in cash balances year-over-year, the net increase was much smaller compared to the previous two years.
At the same time, this year's hot ** is not favored at all by financial advisers.
75% of respondents have no allocation** at all** or have very low exposure, the highest level since 2019 and up from 71% last year. Only 6% of financial advisors increased their exposure**, the lowest level in history.
90% of respondents said they do not plan to change the allocation ratio.
When asked how financial advisors' clients plan to spend their money, 9% said their clients plan to buy a home, double the percentage last year. At the same time, only 5% of respondents said their customers plan to spend money on vacations, trips, etc., down from 8% last year.
Thirty-four percent of respondents said their customers plan to buy** with excess cash, up from 26% last year.
Another 30 percent of respondents said they plan to buy bonds, up from 29 percent last year. Only 16% of respondents said customers plan to continue holding cash, down sharply from 27% last year.
Most financial advisors believe that geopolitics (23%) and debt (20%) are the biggest risks to the market. Last year, recession (18%) and central bank policy mistakes (17%) were listed as the biggest risks, with geopolitics (15%) in third place.
According to Bank of America's own macro **, the rebound in inflation is the biggest risk**. But only 7% of respondents agree this year, down from 15% last year and 19% in 2022.
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