Fund managers bet on US stocks

Following the unexpected victory of Donald Trump in the US presidential election, global fund managers have trimmed their allocation to emerging market equities and have turned overweight on US equities.

According to a global fund managers survey conducted by Bank of America Merrill Lynch (BoAML), allocation to emerging market equities have fallen to a net four per cent overweight in November as compared to 31 per cent last month, the biggest month on month decline since February 2011. However, the allocation to the US jumped to net four per cent overweight from seven per cent underweight last month.

Foreign portfolio investors (FPIs) have offloaded shares worth `9,400 crore from the domestic equity market post-US election results triggering a deep correction in Indian equities.

The bond yields in the United States has spiked to a 10-month high signalling an interest rate hike by the US Federal Reserve in the coming days.

The survey was done after the declaration of US election results between November 9 and November 14 in which about 177 fund managers with $456 billion of assets under management (AuM) participated.

The survey highlighted that global investors have cashed out of technology, utilities and telecommunication stocks and has increased their exposure to banks, health care and US stocks as most of the fund managers view the US poll results as unambiguously positive for nominal GDP. Around 35 per cent of the respondents expect the global growth to remain strong as compared to 19 per cent in the previous month. This is the highest reading in last 12 months.

THE SURVEY highlighted that global investors have cashed out of technology, utilities and telecommunication stocks