Bitcoin has been overtaken by commodities as the busiest trade in June, according to the Bank of America Global Fund Managers Survey. Data from the latest survey shows that 26% of respondents believe that ‘long commodities’ are now the busiest trade. Bitcoin’s sharp switch to commodities comes after the cryptocurrency plunged more than 30% between mid-May and the end of the month. Previously 27% of fund managers had aligned themselves with ‘Long bitcoin’ as the busiest trade, now only 21% believe that to be the case.
Booming commodity cycle
Commodity prices have soared in recent months as the world economy approached reopening. Demand for materials has increased, driving up the prices of steel, copper and crude oil. Steel stocks have seen a significant rebound as prices soared. Rates are expected to remain high with China cutting production for environmental reasons. Crude oil has also passed the $ 70 per barrel mark, hitting multi-month highs. “The allocation to commodities was stable at a net overweight of 27%. The current allocation is 1.9 standard deviation above its long-term average, ”revealed the BofA survey of fund managers.
Increase allocation to technology stocks
Additionally, the 224 fund managers with $ 667 billion in assets under management said tech stocks were back in favor. In May, investors had cut the weighting of tech stocks by more than 8 basis points; in June, the weights increased from 11% to 22%. The commitment to technological actions is not temporary. Fund managers, when asked which assets will perform the best over the next 4 years, favored a bar approach of value stocks at 24% by weight and technology stocks at 23% by weight.
Aside from tech stocks, cyclicals are another hot topic among global fund managers. “FMS are now significantly overweight cyclicals … with a net overweight in banks of 30%, a net overweight in energy of 11% and a net overweight in materials of 23%,” according to the report. Defensives, meanwhile, have been left out with a 39% underweight in utilities and a net underweight in commodities of 4%.
Inflation only temporary
Speaking of inflation, up to 72% of survey participants say inflation is temporary, while only 23% say inflation is permanent. On the economic front, 48% of investors believe that the economy is in the middle of the cycle and is now out of the initial cycle. “Assuming the ‘transitory inflation’ consensus is correct, the ‘spike’ in earnings and growth expectations means that the investment cycle just goes from the initial cycle to the mid cycle,” said BofA.