As fears of a recession grow, professional stock pickers Banks are reportedly moving money out of financially sensitive stocks and parking it in stocks that are considered resilient during economic downturns, such as utilities and consumer staples.
What happened: Bank of America led by strategists Savita Subramanian One note reads that active stock pickers are “positioned for a 2009-style recession.”
Hedge funds that take both bullish and bearish positions have reduced their cyclical holdings in defensive stocks to their lowest levels since at least 2012. informed of Citing data compiled by Bloomberg bofa,
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The relative exposure of long-only managers to cyclical companies is currently at its lowest level since 2008, the report said.
US markets closed in the red on Monday as market participants JP Morgan Chase & Co. jpm taking over First Republic Bank FRC show more caution of the Federal Reserve Decision on interest rate this week, SPDR S&P 500 ETF Trust Spy closed down 0.1%, while Invesco QQQ Trust Series 1 QQQ fell 0.11% on Monday.
Bonds Vs Equity: In BofA’s latest survey of money managers in April, cash holdings remained high and bonds were preferred more than stocks at any time since 2009.
The recent trend towards defensive stocks is different from the trend in 2022, when fears of recession ran rampant and active funds were on a cyclical stance, the report said. that stance indicated confidence in of the Federal Reserve Ability to engineer a soft landing with its aggressive inflation-fighting policy. However, such confidence is hard to come by in recent times, the report said.