Global investor sentiment has reached its highest level since February 2025, according to Bank of America’s September Global Fund Manager Survey, with optimism bolstered by rising equity allocations, firmer global growth expectations and stabilising cash levels.
The bank’s broadest measure of sentiment, based on cash holdings, equity exposure and growth expectations, rose to 5.4 from 4.5, marking the strongest reading in seven months.
Meanwhile, the Bull & Bear Indicator edged higher to 6.0 from 5.9.
Average cash levels remained steady at 3.9 per cent for a third consecutive month, having triggered a “sell” signal for the survey’s cash rule in July when balances fell from 4.2 per cent.
Institutional equity positioning has risen to a net 28 per cent overweight, a seven-month high and narrowing the gap to retail investors, who hold 67.3 per cent of their portfolios in stocks.
Optimism about global growth has rebounded strongly with a net 16 per cent of investors now expecting the global economy to strengthen, a 25 percentage point improvement from August (net -41 per cent), marking the biggest monthly increase since October 2024.
Overall, 67 per cent of respondents expect a “soft landing”, while 18 per cent foresee “no landing” and 10 per cent predict a “hard landing”, up modestly from 5 per cent in August.
Risk appetite, measured by allocations to US equities, continues to outpace growth expectations, though the gap has begun to narrow, according to the bank
On risks, 26 per cent of investors identify a second inflation wave as the top tail risk, while 24 per cent highlight concerns about Federal Reserve independence and potential US dollar debasement.
Trade war fears have subsided, with just 12 per cent citing it as the biggest threat to the global economy, down from 29 per cent in August.
Positioning trends underline these shifts, as the “Long Magnificent 7” trade remains the most crowded for the second consecutive month, cited by 42 per cent of respondents.
“Long gold” jumped to second place at 25 per cent, more than doubling from 12 per cent in August.
At the same time, a record 58 per cent of fund managers now view global equity markets as overvalued, compared with just 10 per cent who say the same of bond markets.
The survey further revealed that artificial intelligence (AI) remains a defining theme, with nearly half of investors believing AI stocks are not in a bubble, while 50 per cent say the technology is already lifting productivity.
Another 28 per cent expect AI to boost productivity beyond 2026, 15 per cent forecast benefits in 2026, and only 1 per cent see a meaningful impact as early as the second half of 2025.
