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(Bloomberg) — Fund managers overseeing $593 billion were bracing for extreme market turbulence as they expect the result of the November U.S. election to be contested even as the Democratic nominee Joe Biden holds a comfortable lead over President Donald Trump.

Among investors surveyed in the week through Oct. 8 by Bank of America Corp., 61% believe the U.S. vote’s outcome will be challenged, causing maximum volatility in the final months of the year. The monthly survey took place at a time when, according to RealClearPolitics, Biden held a lead of an average of 9 percentage points nationally over Trump.

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BofA’s poll signals that investors remain on edge ahead of the Nov. 3 election and fear a delayed outcome as the Trump campaign continues to raise questions about the legitimacy of mail-in ballots. That stands in contrast to Wall Street strategists, who have been saying that there’s now less chance of a contested election.

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Goldman Sachs Group Inc. economists have said that a combination of early results, voter turnout, county-level data and the high correlation of polling errors across states suggests investors will have enough information on election night to determine the likely victor.

‘Blue Wave’

Ronald Temple, head of U.S. equities at Lazard Asset Management, said that even as some investors don’t favor a “blue wave” of Democratic wins because of the risk of tax increases, the market is better off knowing the election result straight away.

“The worst outcome is a contested election because companies and investors really hate uncertainty,” Temple said by phone. “Part of the reason you’ve seen markets working their way back higher in the last couple of weeks is that the probability of a contested election has gone down.”

The S&P 500 has risen nearly 10% over the past three weeks as investors await more U.S. fiscal stimulus and Biden advances in polls. Strategists, including those at UBS Global Wealth Management, have said that a string of Democratic wins in the November election would mean more fiscal spending as the party prioritizes the economic rebound.

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At the same time, despite the continuing battle over U.S. fiscal stimulus, recession fears among fund managers have receded, according to BofA. Investors continue to expect a bumpy or a slow recovery, with just 19% betting on a quick V-shaped economic rebound.

Money managers continue to reduce their cash levels, which fell to 4.4% in the latest survey period, while boosting their equity exposure, with a net 27% of survey participants saying they are overweight stocks. According to BofA, this level shows they are optimistic on equities, but not “dangerously.”

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Fund managers paused the rotation into cyclicals, selling energy and banking stocks along with bonds while buying healthcare, staples and Japanese shares, the survey showed. Among the polled investors, 50% said technology shares will remain market leaders next year, while 43% disagreed.

BofA strategists led by Michael Hartnett said they expect the cyclical equity rotation into banks and energy to resume in the fourth quarter. They also recommended selling the S&P 500 above 3,600 index points, which is about 1.9% above Monday’s close.

Other highlights of the October BofA survey include:

Hedge funds increased net equity exposure to 42% from 30%, the highest level since June 2020A net 39% of investors expect a credible Covid-19 vaccine to be announced in the first quarterCovid-19’s second wave is seen as the biggest tail risk, followed by the U.S. electionLong U.S. tech stocks remains the most crowded trade followed by short U.S. dollar and long gold tradesAllocation to Euro-zone stocks increased 4 percentage points to a net 26% overweight, to remain the region with the highest overweight globallyAllocation to U.S. equities rose 1 percentage points to a net 19% overweightInvestors remain deeply net underweight U.K. stocks at 33% even after slightly increasing allocation, while exposure to Japanese stocks increased the most of any region in October to a net 4% overweight

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