A new Bank of America survey shows 24% of fund managers are now overweight US equities, while cash levels among institutional investors have dropped to their lowest point since February. The findings suggest a growing appetite for stocks even as reserve buffers shrink — a combination that has historically signaled market overvaluation and increased vulnerability to pullbacks.
The survey's key findings
Bank of America's latest monthly survey of global fund managers, released Tuesday, found that the net percentage of managers overweight US equities rose to 24%. That's up from 18% in the previous month. At the same time, average cash allocations fell to 4.1% of portfolios, the lowest reading since February. The survey polled 212 panelists with $580 billion in assets under management.
What the numbers mean
When cash levels drop and equity exposure rises, it often means investors are fully committed to the market with little dry powder left. That leaves the market more vulnerable to sudden selloffs if sentiment shifts. The current cash level is below the 4.5% threshold that Bank of America strategists have previously flagged as a contrarian sell signal. The last time cash was this low, in February, the S&P 500 fell roughly 5% over the following weeks.
Investor sentiment and risks
The survey also showed that expectations for a soft landing — where the economy slows but avoids recession — remain high, with 68% of managers predicting that outcome. But the combination of elevated equity positioning and low cash reserves suggests that any disappointment on growth or inflation could trigger a sharper correction. The survey's risk indicators point to a market that is pricing in near-perfect conditions, leaving little room for error.
The next Bank of America survey, due in two weeks, will show whether this trend continues or reverses. For now, the data paints a picture of a market that is increasingly stretched, with investors betting heavily on stocks while keeping their cash cushions thin.
