A recent survey of global fund managers conducted by Bank of America has identified ‘long gold’ positions as the most crowded trade, capturing 43 per cent of respondents’ allocations. This preference overshadows the ‘long Magnificent Seven’ trade, which garnered 39 per cent, and ‘short US dollar’ at 8 per cent. The survey underscores a significant shift towards gold as a favoured asset among investment professionals.
Delving deeper into gold allocations, the survey revealed a diverse range of positions. A substantial 39 per cent of fund managers reported gold holdings closest to 0 per cent, while 19 per cent have allocated approximately 2 per cent to gold, and 16 per cent hold around 4 per cent. The weighted average allocation to gold stands at 2.4 per cent, increasing to 4.2 per cent among those investors actively allocating to the precious metal.
Bank of America’s analysis also highlighted historical trends in market leadership. Since 2013, leadership has shifted across various assets, including high-yielding debt, the US dollar, quality stocks, and technology, and more recently, bitcoin, commodities, and the ‘Magnificent Seven’. Now, gold has become the asset of choice. The survey also identified emerging concerns among fund managers, with the primary tail risk being an ‘AI equity bubble,’ cited by 33 per cent of respondents in October, a significant increase from 11 per cent the previous month.
Other major concerns include geopolitics, fears of US dollar debasement, and persistent inflation.
