Fund managers are the most bullish since July 2021 while their cash levels are at a record-low of 3.2%, according to a Bank of America survey that collected responses from 196 participants with a combined $575 billion in assets under management.
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In addition, fear of a recession dropped to a two-year low, while almost half of respondents said they do not have downside protection, the highest level since 2018.
Fund Managers Call Out Gold as a Crowded Trade
Fund managers may be exposed to a stock market correction, as 48% reported being overweight equities. “Low levels of stock market hedging are irrelevant in a world of positive surprises,” wrote BofA strategists led by Michael Hartnett. “But it matters greatly if surprises suddenly turn greatly.”
The survey noted that geopolitical tensions are the biggest risk to the market, with an AI bubble trailing behind. Furthermore, respondents believe that a long position in gold (XAUUSD) is the most crowded trade.