BofA survey finds global investors most bullish since February

Bank of America's ↘ 3.04% July Global Fund Manager Survey, released Tuesday, shows investor sentiment has climbed to its highest level since February, as fund managers embrace risk assets amid growing confidence in the macroeconomic outlook.

Cash Plunges as Risk Appetite Surges

Cash allocations among surveyed fund managers fell to what the bank described as an "uber-low" of 3.6%, down from 4.1% in June, according to Reuters. The sharp drop in cash holdings signals that managers are deploying capital aggressively into equities and other risk assets, a hallmark of bullish positioning.reuters+1

The survey's composite sentiment indicator, which tracks cash levels, equity allocation, and global growth expectations, pointed to the strongest optimism in five months. The shift marks a notable reversal from March, when stagflation fears had driven sentiment to a six-month low and half of respondents expected below-trend growth with above-trend inflation.trustnet+1

AI and Rate Cut Hopes Drive Confidence

The renewed bullishness appears rooted in several converging themes. Artificial intelligence continues to dominate positioning, with the June survey having shown 56% of managers characterizing AI stocks as being in a "boom" phase and semiconductor holdings at record levels. Expectations of a dovish Federal Reserve have further bolstered risk appetite, with managers anticipating rate cuts in the months ahead.tradingview

The turnaround from early 2026 has been dramatic. After tariff-related uncertainty and inflation fears weighed on positioning through March and April, sentiment rebounded sharply in May when fund managers made their largest monthly increase in equity allocations since 2001. The July survey suggests that momentum has continued to build.axios

Crowded Trades and Tail Risks Remain

Despite the bullish tilt, concerns persist. In recent months, "second wave inflation" has consistently ranked as the top tail risk identified by managers, while the possibility of an AI bubble bursting remains a closely watched threat. Long positions in global semiconductors have been flagged as the most crowded trade for several consecutive months, a concentration that historically precedes rotations when sentiment becomes stretched.tradingview+1

BofA noted in its July 2025 survey under similar conditions that "toppy" sentiment tends to lead to sector rotation rather than broad market retreat — a pattern investors will be watching closely in the weeks ahead.reuters