The August global fund manager survey was the third most bullish survey conducted by BofA since at least 2022, as cash hit an “uber low” and equity allocation surged to the highest level since November 2021.
A net 56% of fund managers were overweight global equities, with roughly 43% of investors forecasting a “boom”, according to the report. This was the highest number of investors predicting a boom since early 2022, according to the report.
This marked the 14th consecutive month of equity overweights in the fund manager survey.
On top of this, nearly 40% of surveyed investors predicted double-digit earnings growth over the next 12 months, a reversal compared with early this year, when respondents expected negative EPS growth.
Meanwhile, fund managers’ cash allocation has slid to just 3.5%, the sixth-lowest cash allocation since 1998. This reflected a very slight drop from July, when the average cash holding among surveyed managers was 3.6%.
In terms of the wider asset allocation picture, the report found that respondents were most overweight in global equities, emerging markets and tech stocks, ranging from around 40 to 60 percentage points overweight. Fixed income, UK stocks and consumer staples remained the least favoured areas among respondents.
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Fund managers were also increasingly bullish on gold, with roughly 16% now saying the yellow metal looked undervalued.
Meanwhile, sentiment towards US equities was up, with fund managers pushing their overweight to 27%, one of the highest levels since December 2024. This was supported by broadly neutral expectations of the US macro picture, with roughly 72% predicting no hike in the US interest rate before the midterms. Over half of respondents also predicted that Federal Reserve chair Kevin Warsh’s upcoming Jackson Hole speech at the end of August will skew neutral.
That said, respondents in the global fund manager survey acknowledged some of the headwinds facing global markets. Some 53% identified being long global semiconductors as one of the most crowded trades right now, although this is down sharply from the record high of 82% in July.
Similarly, concerns over an AI bubble remained the biggest tail risk according to investors at roughly 32% of respondents. A further 38% argued that capex from the AI hyperscalers would be the most likely source of a “systematic credit event” if one occurred.
A new concern for respondents in the fund manager survey was the crowded Japanese yen trade, with 12% of investors identifying it as a concern.
See also: Japan grapples with yen strength following US intervention
In terms of expectations for the next 12 months, a net 17% of respondents in the BoFA survey expected value to be the best-performing investment style. This contrasts with the July survey, when 6% of respondents expected the opposite.
