- Cash holdings drop to 3.9%, near historic lows, signaling strong risk appetite.
- Net 14% overweight in global equities marks the highest allocation since February.
- 68% of managers expect a soft landing, with rate-cut optimism at its strongest since December 2024.
Investor Sentiment Hits Post-February High
Fund managers have slashed cash allocations to 3.9% of assets, according to Bank of America’s August Global Fund Manager Survey, reflecting the most bullish stance since February. The survey, which polled 169 panelists overseeing $413 billion between July 31 and August 7, shows a net 14% overweight in global equities—the highest in six months.
Soft Landing Dominates Macro Views
A striking 68% of respondents anticipate a soft landing for the global economy, while just 5% fear a hard landing. This optimism has fueled a rotation into emerging markets (37% overweight, the most since February 2023) and cyclical sectors like utilities and energy. Meanwhile, allocations to eurozone stocks and real estate have dwindled.
Crowded Trades and Contrarian Risks
The "long Magnificent 7" trade remains the most crowded, with 45% of managers citing it as their top position. Yet, BofA strategists warn that sentiment appears "toppy," with cash levels tripping their proprietary sell signal. While outright selling hasn’t materialized, hedging and sector rotation are rising as precautions against potential reversals.
Policy and Positioning Watchpoints
With rate-cut expectations at their strongest in eight months, managers are closely monitoring Fed communications and inflation prints. Any deviation from the soft-landing narrative could test the current bullish consensus, particularly given stretched positioning in US tech and underweights in the USD and real estate.
Correction: An earlier version misstated the survey's cash threshold for BofA’s sell signal. The correct level is 3.9%.