In 2018 alone, exchange-traded funds have raked in more than $16.5 billion in fresh cash, according to FactSet. Coming in barely two weeks’ time, that’s well ahead of the $6.5 billion a month pace over the past 12 months.
Pros responding to the BofAML survey say they remain unfazed by the market surge and don’t see the top coming until sometime in 2019.
That optimism is fueled largely by hopes for global growth, with a net 47 percent saying they expect the economy to be stronger over the next 12 months, a 16 percentage point gain from December.
They see far greater risks in the bond market, which they rate the top “tail risk” while at the same time rating bets against volatility to be the most crowded trade. In fact, the level of managers overweight stocks compared with government bonds is at its highest level since 2014.
Investors rate inflation or a bond crash as the biggest market danger for 2018, replacing fears of a policy mistake by the Fed or the European Central Bank. Fears of protectionist policies, spurred by some of President Donald Trump‘s rhetoric, have diminished to 63 percent of those surveyed, though that’s up from the long-term average of 45 percent.
In sector allocations, managers say they’re moving out of telecom and into tech, industrials and emerging markets. The iShares Core MSCI Emerging Markets fund has pulled in $1.3 billion in creations for 2018, the third most of any ETF.
The high optimism among fund managers correlates with other investor surveys.
The American Association of Individual Investors saw bullishness take a dip over the past week, but those expecting gains over the next six months outnumber those who think the market will fall by a 48.7 percent to 25.1 percent. The spread is even wider in the Investors Intelligence count of market newsletter authors, with the bull-bear spread at 64.4 percent to 13.5 percent, the biggest gap since April 1986.
WATCH: Why the bull may be running out steam.
