Over half of global fund managers expect inflation to soar worldwide and cash levels among investors to slump, according to a new survey.
The BofA Merrill Lynch November Fund Manager survey suggests a record net 56% of investors think current fiscal policy is too restrictive, while global inflation expectations among respondents soared to 85% - the highest in 12 years.
The research, which was conducted in the days immediately following the US presidential election, also indicates cash levels slumped from 5.8% in October to 5.0% in November, as global growth and profit expectations rose to one-year highs and the US election result is seen as an unambiguously positive for nominal GDP.
However, stagflation expectations among fund managers was close to a four-year highs, with 22% of investors expecting below-trend growth and above-trend inflation over the next 12 months.
Other findings from the study show protectionism as the biggest risk to financial market stability, with nearly half of respondents believing the rotation to cyclical styles and inflationary sectors will continue well into 2017.
Meanwhile, investors believe the US election result accelerates rotation into banks, out of high dividend yield and bond proxies and catalyses the buying of US equities, selling Tech and EM.
177 clients with $46 billion in assets under management were surveyed for the BofA Merrill Lynch study.
