Managers make record increase to commodity allocations

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Fund managers made their largest month-on-month increase in commodities allocations on record in March, the Bank of America Merrill Lynch fund manager survey shows.

Allocations to commodities have jumped to a nine-month high, rising to a net 13 per cent underweight from a net 29 per cent underweight last month.

The rise is the biggest month-on-month jump on record since 2006, the survey finds.

Allocations to real estate also jumped to a net 11 per cent overweight from a net 1 per cent overweight in February.

The report also showed average cash balances were down to 5.1 per cent from a 15 year-high of 5.6 per cent in February.

BAML chief investment strategist Michael Hartnett says: “With cash levels now slightly above their three-year average, investors no longer are sending the unambiguous buy signal we saw last month.”

Looking to the most crowded trades, managers are buying industrials, which was the biggest month-on-month rise since 2009, as well as resources.

Emerging markets saw their highest allocations in 10 months, to a net 11 per cent underweight from net 23 per cent underweight last month. However, the month also marked the 15th straight month of emerging market equities being underweight – the longest on record.