–Macro-optimism Highest Since August 2021
–Expectation For Higher Bond Yields Highest Since April 2022
by Vicki Schmelzer
NEW YORK (MaceNews) – Global investor optimism was high in December, driven by “’run-it-hot’ macro and policy expectations,” according to the latest BoA Global Fund Managers survey, released Tuesday.
This month, a net 18% of those polled looked for stronger growth in the coming year, up from a net 3% looking for stronger growth in November and compared to October, where a net 8 % looked for weaker growth. As a reminder, in April, a net 82% of managers looked for weakness, the “most on record” (BoA Global 30-year history).
Inflation concerns readjusted again this month, with a net 2% of fund managers looking for higher global CPI in the coming year, compared to November when a net 2% of fund managers looked for lower global CPI in 12 months’ time. This compared to a net 24% looking for higher inflation in the prior two months.
Overall, macro-optimism was the highest since August 2021, the survey said.
Accordingly, fund managers continued to gravitate towards riskier assets..
In December, a net 42% of portfolio managers were overweight global equities, compared to a net 34% overweight in November and a net 32% overweight in October.
A net 29% of managers were underweight bonds, compared to a net 12% underweight in November and a net 24% underweight in October.
“On bond yield expectations…net 38% of December FMS investors expect long-term interest rates to be higher in 12 months’ time, the most since Apr’22,” BoA Global noted.
Fund managers cash levels fell to 3.3% this month, versus 3.7% in November and 3.8% in October.
“Cash levels <3.6% has occurred 9 prior times since 1998, and global stocks fell -2% on average in the following month,” the survey said.
Cash allocation held at a net 11% underweight in December, compared to a net 8% underweight in November and a net 13% underweight in October.
Allocation to real estate was unchanged at a net 16% underweight this month, compared to a net 12% underweight in October.
In December, commodity allocation stood at a net 18% overweight versus a net 17% overweight in November and a net 14% overweight in October.
In terms of regional equity allocation, the U.S. and eurozone saw more marked inflows while other regions saw modest adjustments only.
Allocation to U.S. equities flipped to a net 6% overweight in December from a net 6% underweight in November and compared to a 1% overweight in October.
This month, a net 18% of those polled were overweight eurozone stocks versus a net 9% overweight in November and a net 18% overweight in October.
Allocation to global emerging markets (GEM) stood at a net 39% overweight in December, compared to a net 36% overweight in November and a net 46% overweight in October.
This month, allocation to Japanese equities held unchanged at a net 4% underweight, while UK allocation improved to a net 24% underweight from a net 29% underweight in November.
In terms of the three biggest “tail risks” seen by managers, in December, these were “AI bubble” (38% of those polled), “Disorderly rise in bond yields” (19%), and “Inflation” (17%).
in November, the “tail risks” were “AI bubble” (45% of those polled), “Disorderly rise in bond yields” (17%) and “Inflation” (16%).
In December, the three “most crowded” trades were seen as “Long Magnificent 7” (54% of those polled, the same as November), “Long Gold” (29%) and “Short U.S. dollar (5%).
In November, the “most crowded” trades were as “Long Magnificent 7” (54% of those polled), “Long Gold” (28%) and “Short U.S. dollar” (6%).
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 238 panelists participated in the BofA Global Research fund manager survey, taken December 5 to December 11, 2025.
Contact this reporter: vicki@macenews.com