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No longer seeing a recession, fund managers are beginning to shift into industrials and value stocks

Fund managers are rotating but not chasing stocks after the massive rally from March lows, according to the latest reading of Bank of America’s popular fund manager survey.

The survey found that cash levels rose by fund managers, to 4.8% of their portfolios in September from 4.6% in August. At the same time, investors allocated more cash to industrials, small capitalization stocks and value at the expense of technology, healthcare and large caps.

A net 18% are overweight equities which is not particularly high in the history of the survey.

Strategists led by Michael Hartnett said positioning implies a range of the S&P 500 index SPX, -0.46% between 3,300 and 3,600, and that the cyclical rotation is still in its early phase.

For the first time since February, more investors say the global economy is in an early cycle phase rather than recession.

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