Fund managers globally have reached their most optimistic stance since July 2021, according to a Bank of America survey released on Tuesday. The January survey indicated that growth optimism has surged, while cash holdings have dropped to a record low of 3.2%.
Bank of America's Bull & Bear Indicator climbed to a "hyper-bull" reading of 9.4. The survey, which involved 96 participants managing $575 billion in assets, found investors held the least protection against an equity market correction since January 2018.
A net 38% of those surveyed anticipate a stronger economy. Fears of a recession have fallen to their lowest point in two years, with investors now largely adopting an economic "no-landing" scenario as their base case, the report stated.
Market liquidity is perceived to be at its best level since 2021. Nearly half of the respondents reported having no hedges in place to guard against a sharp decline in stock prices.
Geopolitical concerns have replaced fears of an AI bubble as the primary tail risk identified by managers. The most crowded trade reported was a long position on gold. The survey was conducted between January 8 and January 15.