BofA survey puts investor optimism near a four-year high
Bank of America said in its August Global Fund Manager Survey that optimism among the 180 asset-management representatives it surveyed reached its third-highest level since 2022. The reading suggests bullish sentiment in financial markets has risen to its highest point in nearly four years.
The respondents collectively manage more than $500 billion in assets.
Cash holdings fall to 3.5%
The survey also showed that cash allocations dropped to 3.5%, placing them in the lowest range since the poll began in 1998. Michael Hartnett, BofA’s chief equity strategist, said the bank’s cash rule usually flashes a contrarian sell signal when cash falls to 4% or below.
At that level, positioning is considered crowded. Without a steady inflow of new money, any negative shock from growth, inflation or policy could lead to sharper swings.
BofA highlights contrarian positioning ideas
Against that backdrop, BofA said the survey also pointed to several contrarian trades. With global institutions broadly underweight bonds and gold, going long bonds or buying gold and UK equities at low valuations could offer better defensive returns if sentiment turns.