Global Investors rotating into Private Credit…Australia to follow

Last week we began the discussion about investor return expectations in the current macro environment. We have since seen the results of two key global surveys that shed further light into market expectations and trends in asset allocation.

The Bank of America Global Fund Manager Survey (BofA Survey) is a survey of 225 mutual funds, hedge funds and pension fund managers representing $645bn in funds under management, while the Private Credit Fund Intelligence (PCFI), in association with the Alternative Credit Council, recently surveyed 65 “alternative” investors, representing $3.8tr in total investor assets (of which only $51bn is invested in private credit).

One of the key findings of the BofA Survey is that managers remain incredibly bullish. 91% of investors believe the economy will be stronger in 2021 than last year – the best economic outlook ever – and 34% expecting a V-shape recovery is taking place compared to only 10% 3 months ago.

In this “Goldlocks” environment, a record number of survey respondents are taking higher-than-normal levels of risk. Cash allocation is down to 3.8%, the lowest level since March 2013, and allocations to stocks and commodities are the highest since February 2011.