Key facts
- Global investor sentiment reached its highest level since February, driven by optimism on economic growth, AI spending, and monetary policy.
- Cash allocations among fund managers dropped to 3.6%, a level that historically signals a contrarian sell signal for BofA.
- A record 54% of surveyed investors anticipate a 'no landing' scenario for the global economy, with only 2% expecting a hard landing.
- U.S. equity allocations saw their largest overweight position since December 2024.
- AI bubble risks emerged as the top tail risk concern for 45% of respondents.
- The majority of investors (83%) do not foresee the Federal Reserve increasing interest rates before the November U.S. midterm elections.
Global investor sentiment has reached its strongest level since February, according to Bank of America's latest Global Fund Manager Survey. Fund managers are increasingly optimistic about the economic outlook, artificial intelligence-linked spending, and the prospect of a dovish Federal Reserve.
Cash allocations fell to an "uber-low" of 3.6% from 4.1% in June, a level that triggered BofA's contrarian sell signal. A record share of respondents, 54%, said they expect a "no landing" scenario for the global economy, while only 2% anticipate a hard landing.
U.S. equity allocations were raised to the highest overweight position since December 2024. Long global semiconductor stocks remained the market's most crowded trade for a third consecutive month, cited by 82% of investors. While some investors trimmed technology positions, none reported being short the sector. Sixty-one percent of respondents believe hyperscalers are unlikely to cut capital expenditure this year.
AI bubble risks rose to the top spot among the largest tail risks facing markets, pointed to by 45% of respondents. The majority of investors, 83%, do not expect the Fed to raise interest rates before the U.S. midterm elections in November. Additionally, investors cut their end-2026 oil price forecast to $71 a barrel from $86 in June.