Here are Bank of America’s best contrarian trades for July

Fund managers have piled into bank stocks, eurozone equities and cash, according to a survey conducted by Bank of America Merrill Lynch.

At the same time, they are betting relatively little on energy stocks, U.S. equities overall and commodities, as shown in the chart below from BAML’s global fund manager survey conducted from July 7 to July 13.

That means the “best contrarian trades” right now are going with the energy sector

XLE, +1.27%

  over banks

XLF, -0.08%

 , American stocks

SPY, +0.47%

 over the eurozone’s

EZU, +0.27%

 , and commodities

DBC, +1.02%

 over cash, said BAML strategists Michael Hartnett and Jared Woodard in a note.



KBE, -0.37%

 are “the most overweight global sector,” knocking tech

XLK, +0.57%

 out of the top spot, the strategists added. The term “most overweight” means portfolios are especially tilted toward banking stocks.

And fund managers haven’t been this turned off by U.S. stocks overall (aka underweight) since January 2008, according to BAML’s survey. That is not a big surprise, given persistent complaints that American equities have become too pricey.

See: The U.S. stock market is the world’s most expensive

A total of 207 fund managers with a combined $586 billion in assets under management took part in the survey, according to BAML.


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