Bank of America (US:BAC) on Tuesday released its closely watched global fund manager survey, and the group expects growth stocks to outperform value stocks for the first time in two years.

The results are interesting for several reasons. First, interest rates, according to the textbooks, generally make equities less attractive as bond yields rise, providing less risk, and they hits growth stocks, the riskier of the two classifications, the hardest.

It also indicates that the fund managers believe the Federal Reserve may slow the pace of recent unprecedented hikes.

The bank polled investors who collectively manage $836 billion in assets.

According to the fund manager survey, investors’ allocation to technology stocks in August rose by 17 percentage points month-over-month to the highest since April.

The highest proportion of fund managers since 2007 expected declining inflation, at 80% in August.

But rising prices still cast a long shadow 39% of the managers polled called high inflation the market’s most significant risk, ahead of 24% with recession being the primary concern.

Investors will take good news where they find it, and the Bank of America report showed that more of them expect the economy to grow than did in the last survey. But, 58% of those polled expect a recession, compared to 47% in the previous month’s survey.

Fund managers remained underweight in equities in August but trimmed their stance significantly, resulting in a net underweight position of -26% versus -44% in July.

Around the world, European investors’ optimism continued, along with close attention to volatile markets. Fifty-five percent of those queried see the market rally to continue, up from 43% last month.

Seventeen percent of European investors stay stocks are overvalued, a slight rise from July’s 14%.

This article originally appeared on Fintel

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.