Cash levels drop to 3.5 percent as equity allocations hit a five-year high, signaling limited buying power ahead.
Fund managers in BofA’s August survey reached their highest bullishness level in nearly four years, with cash allocations falling to 3.5 percent of assets under management. This marks one of the lowest cash readings in the survey’s history, suggesting positioning may now be a greater market vulnerability than valuation or macro risks.
Equity allocations climbed to a five-year high, while concerns over a crowded semiconductor trade halved from over 80 percent to around 43 percent in a month. Despite the optimism, contrarian signals emerged, including gold’s status as the most undervalued asset since early 2023 and bonds remaining a crowded underweight.
The survey, covering 180 managers with over $500 billion in assets, showed almost no positioning for a Fed hike or economic slowdown. Stretched positioning leaves markets exposed to negative surprises on growth, inflation, or policy shifts.