Finance

Tech stocks: Fund managers dumping them to buy healthcare shares

Published

5 years ago

November 14, 2018

Callum Burroughs

cracked iPhone
Flickr/Carrrrrlos

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 $641 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 allocation
tech stock
allocation
Bank of America Global Fund
Manager Survey

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 $1.4 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 allocation
Bank of
America Global Fund Manager Survey