Investors shun consumer stocks over recession fears

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Investors are avoiding US consumer companies that would be particularly exposed to a recession. Find out more.

However, BofA’s measure of hedge funds’ relative exposure to cyclical companies compared to more defensive businesses has hit its lowest level since at least 2011, while exposure among long-only fund managers was close to an all-time low.

Stock market breadth has improved in recent weeks, but the seven companies still account for two-thirds of the total gains. Some investors have been particularly wary of companies that cater to richer consumers, on account of signs that customers are trading down to cheaper brands. The positioning reflects the unusual nature of this year’s market rally. Many investors started 2023 with limited exposure to stocks owing to expectations the U.S. would fall into recession in the first half of the year. Fear of missing out after a strong rally in big tech has forced many investors to increase their exposure in certain areas, but without necessarily changing their fundamental views about the economic outlook.

 

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