–Growth Expectations Strongest Since February 2026
–Inflation Jitters Sharply Reduced
By Vicki Schmelzer
NEW YORK (MaceNews) – Global fund managers reduced cash and embraced stocks and bonds in July, driven by increasingly bullish sentiment about world growth prospects, according to the latest BofA Global Fund Managers survey, released Wednesday.
This month, a net 21% of those polled looked for stronger economic growth in the coming 12 months, well up from June when a net 1% looked for weaker growth and compared to May, when a net 14% looked for weaker growth.
“Growth expectations have risen to the strongest since Feb’26,” the survey said.
Inflation worries were sharply reduced on the month, with a net 4% of managers looking for lower global inflation in the coming year. This is in sharp contrast to last month when a net 45% looked for higher global CPI and May, when a net 66% looked for higher global CPI.
As a result of the shift in inflation expectations, a net 1% of managers now look for higher short-term interest rates, down from 34% with that view in June.
Fund managers reduced their cash, real estate and commodity allocation, while adding to equity and bond holdings.
Cash levels fell to an “uber-low” of 3.6% of assets under management, the lowest since February 2026. This triggered a “sell signal” on the BofA Global FMS Cash Rule,” which occurs when cash is at or below 4.0%. Cash levels stood at 4.1% in June.
“Note FMS cash level fell to 3.6% or lower in 16 prior instances since 2002,” the survey said.
“On average, stocks fell 1% in the two weeks after (-0.5% in the month after) and Treasuries outperformed,” BofA Global added.
In contrast, cash allocation was neutral in July, compared to a a net 5% overweight in June and a net 3% overweight in May.
In July, a net 42% of portfolio managers were overweight global equities, up from a net 38% overweight in June, but below the net 50% overweight seen in May.
A net 34% of managers were underweight bonds this month, compared to a net 42% underweight in June and a net 44% underweight in May.
Allocation to real estate stood at a net 17% underweight in July, versus a net 15% underweight in June and a net 14% underweight in May.
This month, commodity allocation fell to a net 11% overweight. This is down from a net 25% overweight in June and a net 31% overweight in May.
In terms of regional equities, investors reallocated monies back into the U.S. eurozone and Japan, while trimming holdings in Emerging Markets and the UK.
Allocation to U.S. equities rose to a net 24% overweight, the highest since December 2024. This compared to a net 17% overweight in June and a net 20% overweight in May.
A net 2% of those polled this month were overweight eurozone stocks. This contrasts with the net 15% underweight seen in June and compared to a net 4% underweight in May.
Allocation to global emerging markets (GEM) slipped to a net 32% overweight in July, versus a net 42% overweight in June and a net 48% overweight in May.
This month, allocation to Japanese equities flipped to a net 3% overweight from a net 5% underweight in June, while UK allocation fell to a net 37% underweight from a net 24% underweight in June.
In terms of the three biggest “tail risks” seen by managers, in July, these were “AI bubble” (45% of those polled), “2nd wave inflation” (26%), and “Disorderly rise in bond yields” (14%).
In June, these “tail risks” were “2nd wave inflation” (34% of those polled), “AI bubble” (28%) and “Disorderly rise in bond yields” (19%),
In July, fund managers viewed the three “most crowded” trades as “Long global semiconductors” (82% of those polled – new record), “Long Magnificent 7” (7%) and “Long US dollar” (4%).
In June, the three “most crowded” trades were seen as “Long global semiconductors” (80% of those polled – then record), “Long Magnificent 7 (12%), and “Long Oil” (4%).
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.
An overall total of 210 panelists with $555bn in AUM participated in the BofA Global Research fund manager survey, taken July 2 to July 9, 2026.
Contact this reporter: vicki@macenews.com