Global investors remain “uber-bullish” on the market, but they’re finding it harder to see significant upside in asset prices in the first quarter, according to the Bank of America February Fund Manager Survey. The survey, which polled 212 fund managers with $630 billion in assets under management, found that while investors are optimistic about earnings, they’re also warning that companies are “overinvesting” at a record level.
The survey revealed that commodity overweight positions are at their highest since May 2022, while equity overweight positions are at their highest since December 2024. Cash levels have also increased to 3.4%, indicating that investors are becoming more cautious despite their overall bullish stance. This dichotomy is reflected in the fact that investors are the most optimistic on earnings since August 2021, but are also warning about the risks of overinvestment. The survey also found that the “AI bubble” is considered the top tail risk, while “long gold” is the most crowded trade.
The Bank of America survey also highlighted the growing concern about credit events, with private credit identified as the most likely source of a credit event. This concern is reflected in the fact that investors are increasingly turning to cash and reducing their exposure to riskier assets. The survey also found that investors are becoming more cautious about the impact of rising interest rates on the economy, with many warning that the Federal Reserve may need to slow down its rate-hiking cycle.
The key findings of the survey are summarized in the following table:
| Category | Current Position | Change from Previous Month |
|---|---|---|
| Commodity Overweight | Highest since May 2022 | Increased by 10% |
| Equity Overweight | Highest since December 2024 | Increased by 5% |
| Cash Levels | 3.4% | Increased by 1.2% |
Looking ahead, the survey’s findings suggest that investors will need to navigate a complex and potentially volatile market environment in the coming months. With the Federal Reserve’s rate-hiking cycle continuing and concerns about credit events growing, investors will need to be cautious and adaptable to succeed. The survey’s warning about the “AI bubble” and the risks of overinvestment also suggest that investors will need to be careful not to get caught up in the hype surrounding certain assets or sectors.
⚡ Why it matters: The Bank of America February Fund Manager Survey provides valuable insights into the mindset of global investors and the trends that are shaping the market. The survey’s findings have significant implications for investors, policymakers, and anyone looking to understand the complex and rapidly evolving market landscape.
📊 By the numbers:
212 fund managers participated in the survey
$630 billion in assets under management
3.4% cash levels
10% increase in commodity overweight positions
5% increase in equity overweight positions
🔗 Source: Bank of America*
