Keeping an eye on what professional portfolio managers are doing is a smart move. Not only can it help you identify investment opportunities, but it can also help you avoid risks.
With that in mind, I want to highlight the findings from Bank of America’s (BoA) July Global Fund Manager Survey. This is a monthly survey that canvasses the views of around 200 institutional, mutual, and hedge fund managers around the world. Here’s a look at where top portfolio managers are putting their money right now.
The pros are investing in these sectors
In terms of sectors, the two most popular among those surveyed were Healthcare and Technology. Meanwhile, the most out-of-favour sectors with portfolio managers were Energy, Banks, and Industrials.
It’s not hard to see why the pros are investing in Healthcare and Technology right now.
As I explained recently, Healthcare has a number of things going for it at the moment. For starters, it’s leading the fight against Covid-19. Any company that successfully creates a vaccine (both AstraZeneca and GlaxoSmithKline are engaged in Covid-19 vaccine development) is likely to do very well.
Secondly, Healthcare is a highly resilient sector. That makes it attractive in the current economic climate. Third, Healthcare looks set for strong growth in the long run due to the world’s ageing population.
The Technology sector also has a lot going for it right now. It’s technology that’s helping us work from home, shop from home, and communicate with friends and family throughout the Covid-19 pandemic.
Going forward, the tech sector is likely to continue growing at a rapid rate as technology continues to disrupt industries. If you’re looking to invest in the Technology sector, you’ll find plenty of opportunities on the London Stock Exchange.
This is what keeps portfolio managers awake at night
On the risk side, the fund managers surveyed said a second wave of Covid-19 was one of the main investment risks on the horizon. Over 50% of respondents ranked this as the top risk. The upcoming US presidential election was another risk on the minds of the pros.
Meanwhile, around three out of four fund managers said US technology/work-from-home stocks are the most ‘crowded’ trades at the moment. That was the highest reading in the survey’s history, which is certainly something to keep in mind. Around 70% of those surveyed also said that parts of the stock market were overvalued.
It’s worth pointing out that cash levels among fund managers reached 4.9% in July, up from 4.7% in June. This suggests the pros want to have plenty of cash on the sidelines so that they can take advantage of investment opportunities if there’s another stock market crash.
The best investment opportunities?
All in all, there were certainly some interesting takeaways from this month’s BoA fund manager survey. One key takeaway was that the pros believe the Technology and Healthcare sectors offer the best investment opportunities at present.