Investors are the least bearish since February 2022, according to BofA.

Investors are the least bearish since February 2022, according to BofA.

Investors’ Sentiment Improves in August: Cash Allocations at 21-Month Low

Image

Investors around the world are feeling increasingly positive about the future, as evidenced by the latest Bank of America survey. The survey, conducted among fund managers with a whopping $545 billion of assets under their management, revealed that sentiment among global investors has reached its highest level since February 2022. Cash allocations have now fallen to a 21-month low, underscoring investors’ optimism.

While investors still anticipate a weakening in global growth over the next 12 months, their expectations have improved significantly. A staggering three out of four respondents believe that a soft landing or no landing in global growth is possible. This is a notable shift from the previous month, wherein 60% of investors expected weaker growth. The proportion of those expecting weaker growth fell to a net 45% in August.

The survey also revealed interesting insight into investors’ asset allocation. Cash allocations decreased from 5.3% to 4.8% in the past month, suggesting a reduction in cash holdings. Additionally, the underweight in equities narrowed to its smallest level since April 2022, indicating a greater preference for stocks.

The Bank of America survey also shed light on a recent trend in the real estate market. As investors rotated into stocks and commodities, positioning on REITs (Real Estate Investment Trusts) reached levels not seen since the Global Financial Crisis. This capitulation in positioning on REITs suggests that investors are pivoting towards other asset classes in search of better returns.

Overall, the survey results paint a picture of improving sentiment among global investors. The decline in cash allocations and narrowing underweight in equities indicate a growing appetite for riskier investments and a belief in the resilience of the global economy. While concerns about weakening growth persist, the shift in expectations towards a possible soft landing or no landing is a positive sign.

However, it’s important to remember that investor sentiment can be volatile and subject to change. As economic conditions evolve, so may investors’ outlooks and strategies. Nevertheless, the current optimism expressed by fund managers in the Bank of America survey provides some reassurance about the current financial climate.