Investors are in “full bull” mode, deploying more money into emerging markets, small-cap stocks and the banking sector on hopes a that Covid-19 vaccine will turn around these hard-hit market segments, BofA’s monthly investor survey showed on Tuesday.

The euphoria sent investors’ cash levels down to 4.1 per cent in November, from 4.4 per cent last month, to pre-Covid-19 levels last seen in January, according to the survey of 190 fund managers with $526 billion in assets under management.

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With global economic growth and profit expectations running at a 20-year high among the investors surveyed, the “reopening rotation” into oversold business sectors is likely to continue in the fourth quarter, BofA said.

But the bank advised clients: “We say ‘sell the vaccine’ in coming weeks/months as we think we’re close to ‘full bull’.”

Meanwhile in US Treasuries, 73 per cent of the investors surveyed were expecting steeper yield curves — rates on longer-term US Treasury securities rising faster than short-term rates. Expectations were far higher than after the 2008 Lehman bankruptcy, 2013 taper tantrum and 2016 elections.

For 2021, investors named being “long” emerging market assets, S&P 500 and oil as their favourite trades.

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