The world's biggest fund managers are dumping tech to an extent not seen since the financial crisis — here's what they're scooping up instead

  • Healthcare is now fund managers’ most overweight sector, according to Bank of America.
  • Fund allocation into tech is at its lowest levels since February 2009.

Investors are the least optimistic on tech stocks since the depths of the financial crisis, and are instead piling into another, safer, corner of the market – healthcare.

This month Bank of America surveyed 225 fund managers with $US641 billion in assets under management, who said the most “crowded trade” is in tech stocks – particularly the mega-cap consortium known as FAANG (Facebook, Amazon, Apple, Netflix, and Google) and BAT (Baidu, Alibaba, and Tencent).

The number of investors who said they’re allocating funds to the sector lurched down 7 percentage points, with just 18% say they are overweight. That’s the lowest level since February 2009.

Tech allocationBank of America Global Fund Manager Surveytech stock allocation
The survey found that global investors rate health stocks their No. 1 overweight. And in November, they have been selling tech stocks to pile into health names and other such “defensives.”

Known as a safer alternative in rocky markets, healthcare stocks have outperformed the overall market this year, climbing more than 10% compared to just 2.5% for the benchmark S&P 500. Meanwhile, the SPDR Healthcare Select Sector ETF has absorbed a whopping $US1.4 billion of new capital since the beginning of July.

As such, the number of fund mangers in the survey who said they are overweight health and pharma stocks is up 4 percentage points, to 28%.

The survey’s contrarians, however, noted that US stocks in general, as well as global healthcare names, were most vulnerable to deeper bear markets than most.

Sector allocationBank of America Global Fund Manager SurveySector allocation

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