Tech Euphoria Fades as BofA Finds Lowest Allocations Since 2014By
Almost as many fund mgrs worried about FAANG trade as bitcoin
Caution comes after best global market performance this year
It seems investors are getting more worried about being bitten by the FAANGs.
Allocations to technology stocks fell to 24 percent overweight, the long-term average, according to the latest Bank of America Merrill Lynch survey of fund managers overseeing $558 billion of assets. The reading is the lowest “z-score” for the sector, a measure of extreme positioning, in three and-a-half years.
The shift coincided with concern that positions in the FAANG stocks -- Facebook Inc., Amazon.com Inc., Apple Inc., Netflix Inc. and Google’s owner, Alphabet Inc. -- in addition to Baidu Inc., Alibaba Group Holding Ltd. and Tencent Holding Ltd., known as the BAT stocks, are too popular. The report showed 29 percent of fund managers described the trade as the market’s most-crowded, just behind the 32 percent who chose bitcoin.
Technology stocks have been the best-performing in the global market this year. The MSCI World Information Technology Index has risen 39 percent in 2017, nearly double the 20 percent gain in the MSCI World Index. The sector succumbed to a bout of profit taking earlier this month, as investors sought to lock in some of those gains.
In December, global investors favor banks, technology and industrial shares, according to the report, and are avoiding staples, telecoms, and utilities.