An increasing number of investors are taking higher risks relative to their benchmarks, according to Bank of America’s February Global Fund Manager Survey.
The net percentage taking higher than normal risk levels is hovering in the positive, after three years spent almost entirely in the negatives.
The financial market stability risks indicator fell significantly this month, down from 2.5 to 1.3, suggesting increased risk. Primary components contributing to this shift are protectionist, monetary and geopolitical risk, with the latter reading 84% above normal and rising three percentage points from January. Credit and counterparty risk remain lower risk factors.
Compared to January, fewer survey participants expect high-quality earnings to beat low-quality earnings this year – although 62% remain confident. The percentage of those predicting that high-dividend yield will beat low-dividend yield approximately doubled over the month, while the number anticipating value to outperform growth rose from 1% to 11%.
Only 3% say that small cap will outperform large cap over the year, down from 14% in January.
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