Investor sentiment on global growth is at an all-time high, with fund managers finding find little to be bearish about, according to Bank of America's February Global Fund Manager Survey.
Of the 204 fund managers overseeing a total of $614 billion in assets surveyed, a record net 91% of respondents expect a stronger economy. Meanwhile, net 84% of fund managers expect global profits to improve over the next 12 months, down 3 percentage points from January.
Expectations toward an economic recovery are bullish among fund managers, with 34% saying it's a V-shaped recovery vs. 10% nine months ago. A net 82% of investors said they're expecting a steeper yield curve in 2021, higher than the 2008 Lehman Brothers bankruptcy, the Federal Reserve "taper tantrum" in 2013 and the U.S. election in 2016.
A net 86% of respondents expect higher inflation in the next 12 months, down 6 percentage points from the month prior.
Cash levels among surveyed money managers fell to 3.8% from 3.9%, the lowest since March 2013.
Allocations to equities and commodities among surveyed fund managers increased to net 87%, the highest since February 2011.
A record net 25% of survey respondents are currently taking higher than normal risk levels, up 6 percentage points from the previous month.
COVID-19 vaccine rollout tops the list of biggest tail risks, at 28%, followed by a "tantrum" in the bond market (25%) and inflation (24%).