The S&P 500 (SPX) is up over 30% since the April lows and has set another record high of 6,626.99 on Tuesday. However, that hasn’t dampened investor sentiment, according to Bank of America’s latest survey of global fund managers, who oversee a combined $426 billion in assets. This comes ahead of the Fed interest rate decision on September 17, which will likely begin the next cycle of rate cuts and lower borrowing costs.
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According to the survey, cash remains unpopular with an average allocation of 3.9%. Additionally, a net of 28% of the respondents are overweight equities, marking the highest level in seven months.
Magnificent 7 and Gold Remain Crowded Trades
Meanwhile, long positions in the Magnificent 7 and gold remain crowded. 42% of surveyed fund managers are long the Magnificent 7, while 25% are long the precious metal. Other crowded trades include shorting the dollar at 14% and long crypto at 9%.
Could the rally continue? Bank of America Global Research Chief Investment Strategist Michael Hartnett believes so, saying that the risk of a “recessionary trade war” has fallen while equity exposure still hasn’t reached excessive levels.
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