BofA Global Research Fund Manager Survey:  Fund Managers Cut Back on Risk in September amid Rising Uncertainty

— Managers Increase Cash, Reduce Other Holdings

–Potential ‘Disorderly’ Rise in Bond Yields Seen as Top ‘Tail Risk’

NEW YORK (MaceNews) – Uncertainty about a wide array of issues put a dent in fund manager bullish exuberance in September, as per the latest BofA Global Fund Managers survey, released Tuesday.

As a result of mounting unknowns about U.S. November mid-term elections and the ongoing Iran War, managers increased their cash holdings while reducing positions in all other asset classes.

Shifting world views also forced a rethinking of global economic conditions.

This month, a net 8% of those polled looked for stronger economic world growth in the coming 12 months. This is down from a net 14% looking for stronger growth in August and a net 21% looking for stronger growth in July.

Inflations concerns flipflopped yet again, with a net 4% of managers now looking for lower global inflation in the coming year. This compared to August, when a net 3% looked for higher global inflation and to July, when a net 4% looked for lower global inflation.

In September, portfolio managers increased cash and reduced stock, bond, commodity and real estate holdings.

Cash levels jumped to 3.9% of assets under management. This is up from an “uber-low” of 3.5% in August and the 3.6% seen in July.

Despite the sharp monthly increase, cash level holdings remain below 4.0%, which is deemed “’sell signal’ territory,” BoA Global says.

Cash allocation was “equal weight” in September versus a net 2% underweight in August and neutral in July.

In September, a net 49% of portfolio managers were overweight global equities, compared to a net 56% overweight in August and a net 42% overweight in July.

A net 48% of managers were underweight bonds this month, the lowest bond allocation since May 2022. This compared to a net 39% underweight in August and a net 34% underweight in July.

Allocation to real estate stood at a net 21% underweight in September, versus a net 7% underweight in August and a net 17% underweight in July.

This month, commodity allocation slipped to a net 19% overweight from the net 24% overweight seen in August. Allocation stood at a net 11% overweight in July.

In terms of regional equities, global investors reduced holdings in all countries in September, with emerging markets the exception.

Allocation to U.S. equities decreased to a net 25% overweight, down from a net 27% overweight in August and nearly back at the net 24% overweight seen in July. 

A net 5% of those polled in September were underweight eurozone stocks. This compared to a net 6% overweight in August and a net 2% overweight in July.

This month, allocation to global emerging markets (GEM) rose to a net 38% overweight. This compared to a net 34% overweight in August and a net 32% overweight in July.

In September, allocation to Japanese equities fell to a net 1% underweight from a net 1% overweight in August and compared to a net 3% overweight in July, while UK allocation edged down to a net 35% underweight from a net 33% underweight in August and compared to a net 37% underweight in July.  

The three biggest ‘tail risks” seen by managers in September were: “Disorderly rise in bond yields” (33% of those polled), “AI bubble” (28%) and “2^nd wave of inflation” (24%).

Last month, the three biggest “tail risks” were: “AI bubble” (32% of those polled), “Disorderly rise in bond yields” (27%) and “2nd wave of inflation” (25%).

In September, fund managers viewed the three “most crowded” trades as: “Long global semiconductors” (53% of those polled), “Short Treasuries” (18%) and “Long Magnificent 7” (7%).

In August, the three “most crowded” trades “Long global semiconductors” (53% of those polled), “Short Japanese yen” (12%), “Long Magnificent 7” (11%).

Note that in July, 82% of fund managers polled, a new record, saw “Long global semiconductors” as the “most crowded” trade.

Note: the term “Magnificent Seven” was coined by Bank of America’s chief investment strategist Michael Hartnett, referring to a basket of the seven major tech stocks: Apple, Microsoft, Amazon, NVIDIA, Alphabet, Tesla and Meta.

In a special question on the month, managers were asked if the U.S. Federal Reserve would raise interest rates before U.S. mid-term elections in November.

In the September survey, 52% said “No,” versus 72% in August, while 41% said “Yes,” up from 22% in August.

Another special question asked “the most likely catalyst” to cause asset allocators to shift to an overweight in government bonds.

 Twenty-seven percent said it would take 30-year Treasury yields rising to an “attractive level,” i.e. at or above 6.0% and 19% said “a major top in stock markets.”

Other responses included: “Governments reduce spending to reduce deficits” (14% of those polled), “Fed restarts Quantitative Easing” (14%) and “Deflationary AI labor market disruption (11%).

An overall total of 190 panelists with $512bn in AUM participated in the BofA Global Research fund manager survey, taken September 4 to September 10, 2026.