The latest Bank of America fund manager survey paints a tale of such vaulting pessimism that any lingering doubts about the death of the value rally have been extinguished. In short: there is no hope to be found anywhere.
The survey found that even with inflation topping 9 per cent on both sides of the pond and rates rising - the conditions value investors have been dreaming of for a decade - cash levels are at the highest they have been since 9/11, more than 20 years ago. Meanwhile equity allocations are at their lowest since the collapse of Lehman Brothers.
There was near consensus among survey participants that inflation will fall from here, but the view is that it won’t fall in a way that supports economic growth, meaning stagflation is the only game in town.
If inflation does tumble, that would be expected to boost demand for long duration government bonds.
Our allocations database shows that, in balanced portfolios, DFMs have an average weighting of 5 per cent to govies.
The outlier is Charles Stanley with 13 per cent, while Rathbones and Invesco are at around 10 per cent. Among the firms with zero allocated to govies are Evelyn Partners and Hawksmoor.
This will be something to keep an eye on.