Key Takeaways
- • Global investor sentiment reached its highest level since February 2026, driven by optimism on economic growth, AI capital expenditure, and expectations for looser monetary policy from the Federal Reserve.
- • Cash allocations plummeted to 3.6% (from 4.1% in June), triggering Bank of America's contrarian sell signal and indicating aggressive positioning across markets.
- • A record 54% of fund managers expect a "no landing" scenario for the global economy, with only 2% forecasting a hard landing—reflecting exceptional confidence in sustained growth.
- • U.S. equity allocations reached their highest overweight position since December 2024, while semiconductor stocks remained the most crowded trade for the third consecutive month at 82% investor participation.
- • AI bubble risks emerged as the top tail risk concern for 45% of respondents, despite 61% believing hyperscalers will maintain capital expenditure through year-end and no investors reporting short positions in technology.
Summary
Bank of America's Global Fund Manager Survey conducted July 2-9, 2026 documents a significant surge in investor risk appetite, with sentiment climbing to levels unseen since February. The upturn reflects a confluence of positive macro drivers: accelerating economic growth expectations, robust artificial intelligence-linked capital spending, and market conviction that the Federal Reserve will pursue easier monetary policy in coming months. This bullish sentiment has materially altered portfolio construction across the surveyed fund manager universe.
The most striking evidence of this confidence shift is the compression of cash holdings to 3.6%, down from 4.1% in June. Bank of America notes this "uber-low" allocation level has triggered its established contrarian sell signal—a technical indicator the firm employs to flag potential overextension in bullish positioning. In parallel, fund managers have raised U.S. equity allocations to their highest overweight stance since December 2024, signaling concentrated conviction in domestic markets despite global deployment options.
Economic landing expectations paint an exceptional bull case. A record 54% of respondents anticipate a "no landing" scenario—characterized by sustained economic expansion without recession or meaningful deceleration—while merely 2% forecast a hard landing. This distribution suggests minimal recession pricing into current positioning. Semiconductor equities, particularly those linked to hyperscaler artificial intelligence buildouts, retain their dominance as the market's most crowded trade, with 82% of investors maintaining exposure. Notably, 61% of fund managers expect hyperscalers will not cut capital expenditure through year-end, versus only 28% anticipating reductions.
Despite this bullish tapestry, AI-related risks are surfacing prominently. Forty-five percent of respondents now cite AI bubble risks as the largest tail risk confronting markets, marking it the top concern in BofA's risk rankings. Additionally, 83% of investors do not expect Federal Reserve rate increases before November's U.S. midterm elections. Separately, oil price forecasts were marked down materially, with end-2026 expectations revised to $71 per barrel from $86 in June, reflecting softer energy demand assumptions embedded in the current sentiment regime.
The most striking evidence of this confidence shift is the compression of cash holdings to 3.6%, down from 4.1% in June. Bank of America notes this "uber-low" allocation level has triggered its established contrarian sell signal—a technical indicator the firm employs to flag potential overextension in bullish positioning. In parallel, fund managers have raised U.S. equity allocations to their highest overweight stance since December 2024, signaling concentrated conviction in domestic markets despite global deployment options.
Economic landing expectations paint an exceptional bull case. A record 54% of respondents anticipate a "no landing" scenario—characterized by sustained economic expansion without recession or meaningful deceleration—while merely 2% forecast a hard landing. This distribution suggests minimal recession pricing into current positioning. Semiconductor equities, particularly those linked to hyperscaler artificial intelligence buildouts, retain their dominance as the market's most crowded trade, with 82% of investors maintaining exposure. Notably, 61% of fund managers expect hyperscalers will not cut capital expenditure through year-end, versus only 28% anticipating reductions.
Despite this bullish tapestry, AI-related risks are surfacing prominently. Forty-five percent of respondents now cite AI bubble risks as the largest tail risk confronting markets, marking it the top concern in BofA's risk rankings. Additionally, 83% of investors do not expect Federal Reserve rate increases before November's U.S. midterm elections. Separately, oil price forecasts were marked down materially, with end-2026 expectations revised to $71 per barrel from $86 in June, reflecting softer energy demand assumptions embedded in the current sentiment regime.
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