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Fund managers are believers in the rotating-to-value trade, latest Bank of America survey shows

This creative image taken in a studio in Paris on November 16, 2020, shows a syringe and a vaccine vial with the reproduced logo of a US biotech firm Moderna.


joel saget/Agence France-Presse/Getty Images

Fund managers have aggressively bought into the idea of rotating toward the hardest-hit sectors, according to the latest survey.

The monthly Bank of America fund manager survey shows a net 24% thinking that value stocks will outperform growth stocks, and a net 21% saying that small-caps will outperform large-cap stocks. A net 91% say the economy will be stronger in the next 12 months.

The look at positioning showed a big move into small-cap and emerging markets, and an underweight on cash and staples.

Fund managers are believers in the rotating-to-value trade, latest Bank of America survey shows

News that two coronavirus vaccines have been effective — as well as a relatively smoothly run U.S. election — have sparked a big switch into energy
SP500.10,
+6.49%
,
financial
SP500.40,
+2.27%
,
and travel stocks. The technology-heavy Nasdaq Composite
COMP,
+0.80%

is still registering gains — it ended at a record on Monday — but no longer is leading the market.

The Nasdaq has climbed 33% this year, compared with a 12% gain for the S&P 500
SPX,
+1.16%
.
The iShares MSCI Emerging Markets ETF
EEM,
+1.24%

has gained 9%, and the Russell 2000
RUT,
+2.36%
,
which also closed at a record on Monday, has gained 7%.

A total of 216 panelists running $573 billion in assets under management participated in the survey, which ended on Nov. 12, which was after drugmaker Pfizer announced its vaccine effectiveness but before biotech Moderna did.

Related: Why ‘seriously underloved’ small-cap stocks have room to rise as vaccine progress sparks rotation


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