Global fund managers are “super bullish” thanks to growth optimism driven by “Trump 2.0” and a compliant rate-cutting Federal Reserve, according to the results of Bank of America’s latest Global Fund Manager survey.
In the survey of 204 fund managers overseeing a total of $518 billion in assets under management, the broadest measurement of sentiment — which is based on cash levels, economic growth expectations and equity allocations — jumped to 7.0 in December from 5.2 in November, the highest level of optimism since August 2021 and the largest monthly rise in sentiment since June 2020.
Cash levels fell to 3.9% of AUM in December from 4.3% in November, the lowest level since June 2021, and cash allocations fell to a net 14% underweight, down from a net 4% overweight in November, the lowest since the inauguration of the Bank of America survey in April 2001.
Also in December, global growth expectations over the next 12 months rose to a net 7% expecting a stronger economy, up from November’s net 4% expecting a weaker economy.
The survey cited the election of Donald Trump and his agenda of tax cuts and deregulations as a further driver of boosted profit expectations, with 49% of surveyed managers expecting global profits to improve, up from 17% that expressed that sentiment in November.
In contrast to the drops in cash allocations, the allocation to U.S. equities was a net 36% overweight, a full 24 percentage points above the allocation reported in November and the highest on record in the history of the survey.
When asked what the biggest tail risk is, 37% of managers said a global recession triggered by a trade war, another 37% said Fed rate hikes spurred by inflation; 10% said geopolitical conflict; 4%, systemic credit event; 4%, emerging markets suffer a U.S. dollar funding crisis; and 2%, Eurozone breakup. The remaining respondents gave other responses.
Managers were surveyed between Dec. 6 and Dec. 12.
