Global fund managers have raised equity allocations to the highest level since November 2021, according to Bank of America’s latest survey of 180 participants managing $525 billion in assets.
The August 7-13 survey found 56% of managers were overweight equities, up from previous levels and marking the most bullish positioning since the period tracked. Cash holdings dropped to an "extremely low" 3.5%, reflecting reduced defensive positioning amid rising market confidence.
Semiconductor stocks remained the most crowded trade among respondents, though net 53% identified them as overbought—a decline from 82% in the prior month. The survey also showed net 71% of managers do not expect AI capital expenditure cuts in 2026, while 58% anticipate AI’s labor market impact to materialize no earlier than 2028.
Investor sentiment was ranked by strategists as the third-strongest optimistic reading since 2022, driven by the S&P 500’s recent record close on August 13. However, concerns persist over rising long-term bond yields, inflation risks tied to a debt-financed AI boom, and elevated oil prices following the expiration of the U.S.-Iran ceasefire.
The survey’s consensus, per strategist Michael Hartnett, reflects expectations of no economic slowdown, no Federal Reserve rate hikes, no AI capex reductions, and no Democratic midterm sweep. Hartnett noted that positioning suggests investors are shifting within risk assets rather than increasing overall exposure, indicating a cautious approach despite high equity allocations.
The survey’s findings underscore a market characterized by both elevated risk appetite and lingering caution over macroeconomic and geopolitical uncertainties.
