Fund managers’ cash allocations are at 15-year lows, with an average of just 3.5%, according to the Bank of America February Global Fund Manager Survey.
The bank said this reflects the fact investors remain bullish and long stocks, while being short everything else.
This bullishness may be owing to a positive economic outlook shared by many fund managers, with 82% saying they do not expect a recession this year.
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It also reflects a relaxed view among managers on the prospects of a full scale trade war being sparked by President Donald Trump’s tariff polices.
On the monetary policy front, most fund managers expect a dovish Federal Reserve, with 77% foreseeing rate cuts in the US this year, despite inflation remaining stubbornly above the 2% target.
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There was a note of concern along with the overall bullishness. In a somewhat contradictory finding, BofA said that 89% of fund managers think US stocks are now overvalued.
In terms of overall asset allocation, 35% of fund managers said they are overweight stocks, while just 11% are underweight bonds.
