Fund managers continue to grow more bullish as they lower their cash levels and equity allocations remain high, according to the results of Bank of America's June Global Fund Manager Survey.
The survey's broadest measurement of sentiment — based on cash levels, economic growth expectations and equity allocations — inched up to 6.03 in June from 5.99 in May. That number represents the highest level of bullishness recorded by the survey since November 2021. That broad measure of sentiment had bottomed out at 0.3 in October 2022.
In the survey of 238 fund managers, who oversee a total of $640 billion in assets, equity allocations remained nearly level at a net 39% overweight, down from a net 40% overweight in May. Despite the slight drop, the number still represents a dramatic turnaround in sentiment during the past year. In June 2023, managers reported their equity allocations were a net 32% underweight.
Further reflecting the bullish sentiment, cash levels dropped to a net 6% underweight in June from a net 3% overweight in May.
Fund managers also expressed less pessimism regarding expectations of global growth over the next month. A net 6% said in June they expect a weaker economy, down from a net 9% in May.
The majority of respondents, 53%, said no recession will occur in the next 18 months, while 16% said a recession will begin in the first half of 2025, 14% say the second half of 2025, and only 8% predict a recession before year-end 2024.
Higher inflation, geopolitics and the U.S. election are the three biggest tail risks, according to survey respondents.
When asked what the biggest tail risk is, 32% said higher inflation (down from 41% in May), 22% said concerns over geopolitics (up from 18% in May), and 16% said the U.S. election (up from 9% in May).
Other concerns in June included 14% saying an economic hard landing (down from 15% in May), 9% a systemic credit event (up from 8% in May) and 5% an AI bubble (up from 4%).
Managers were surveyed June 7-13.