BofA survey shows fund managers at peak bullishness since 2021

Global fund managers have pushed their stock allocations to the highest level in nearly five years, even as Bank of America's ↗ 0.53% contrarian sell signal remains firmly in place, according to the bank's August Global Fund Manager Survey released Tuesday.

Crowded and Confident

A net 56% of fund managers surveyed are now overweight equities, the highest reading since November 2021 and the 14th consecutive month of net overweight positioning. Cash allocations fell to 3.5%, down from 3.6% in July — a level BofA strategist Michael Hartnett describes as "uber-low" and the sixth-lowest since the survey began in 1998.bloomberg+2

The survey, conducted between August 7 and 13 among 180 fund managers overseeing $525 billion in assets, also found that a net 37% expect double-digit earnings growth over the next 12 months, the most optimistic reading since August 2021. A record 56% of respondents now expect a "no landing" economic scenario, while just 34% anticipate a soft landing.trustnet

The Contrarian Warning

Despite the euphoric positioning, BofA's Bull & Bear Indicator — a widely followed contrarian gauge — remains deep in sell territory. The indicator stood at 9.7 as recently as early August, its highest level since 2021, after climbing from 9.4. Historically, readings above 8.0 trigger a sell signal, and of the 17 such signals since 2002, global stocks have seen average drawdowns of 2% to 3% in the following three months, with maximum drawdowns ranging from 15% to 20%.businessinsider+2

Hartnett has recommended rotating into defensive sectors while the signal persists. The most crowded trade remains long global semiconductors, cited by 53% of respondents, though that figure dropped sharply from a record 82% the prior month.investing+1

Bubble Fears Persist

The prospect of an AI bubble remains the top tail risk among investors, though concern has eased, with 32% naming it their largest worry, down from 45% in July. Some 71% of respondents do not expect any AI hyperscaler to announce a capital expenditure cut this year. Investors also identified hyperscaler capex as the most likely source of a systemic credit event, with a disorderly rise in bond yields cited as the second-largest fear.trustnet