Nearly 400 monetary advisors surveyed at Financial institution of America’s Merrill Lynch unit stated they favor bonds and money probably the most for funding portfolios, with shares at a “distant third,” a report out Wednesday stated. Bonds as a proportion of portfolios climbed to 27% when the survey was taken in late January and early February, up from 24% a 12 months earlier. The common allocation to money climbed to 10% from 7% a 12 months in the past, whereas shares fell to 57% from 62%. However advisors weren’t bearish on the long-term outlook for shares, with their view of the subsequent 12 months probably the most bullish within the survey’s historical past. Nearly three quarters (about 70%) anticipated “that the bear market will finish in 1H or that the bear market is already over,” the report stated. The survey solely started in 2017, however analysts led by Financial institution of America’s fairness and quantitative strategist Savita Subramanian stated the bond allocation was a file excessive for the survey whereas shares have been at a file low. Nearly two in 5 (39%) of advisors stated “they’re transferring extra into bonds,” with fewer than one in 5 (18%) transferring extra into shares, the report stated. With the excess money that is being generated in portfolios, 26% of advisors plan to purchase shares, down from 42% final 12 months. In the meantime, 29% intend to place the cash into bonds and 30% “are comfortable to stay in money.” The taking part advisors — who’ve a median 17 years’ expertise within the trade — favored worth shares over progress shares, 78% to 12%, (the widest margin ever). They might additionally quite put shoppers in in small shares (46% bullish) than massive cap (39%) or midcap (36%). The largest dangers to the inventory market in 2023 are recession (18%), central financial institution coverage errors (17%) and geopolitics (15%), advisors stated. A 12 months in the past, the No. 1 concern was inflation. By inventory sector, advisors most popular well being care, vitality and financials, and have been most bearish on shopper discretionary, actual property and expertise. Traders may not wish to wager in opposition to these prime three trade teams this 12 months. Financial institution of America stated the highest three favourite sectors have outperformed the underside three by a median of 17 proportion factors every year because the survey started. -CNBC’s Michael Bloom contributed to this story.
Merrill financial advisor survey shows they love cash and bonds, but hate stocks