August 2025 Bank of America Global Fund Manager Survey
The August 2025 Bank of America Global Fund Manager Survey showed sentiment reaching its most bullish since February, with investor positioning reflecting a clear preference for risk assets despite lingering caution on macro and policy fronts.
Global investor sentiment, measured by BofA’s Bull & Bear Indicator, rose to 4.5 from 4.3, marking a six-month high.
The soft-landing view strengthened further, with 68% expecting this outcome, 22% predicting a “no-landing” reacceleration, and only 5% foreseeing a hard landing — the lowest hard-landing probability since January.
Even so, the share of investors predicting weaker global growth over the next 12 months rose to a net 41% (from 31% in July), pointing to a “slower-growth-but-no-recession” base case.
Inflation expectations increased for the second consecutive month, with a net 18% now expecting higher CPI readings — up sharply from 6% in July and the highest since May. Despite firmer inflation expectations, more respondents anticipate lower policy rates, underscoring a view that growth risks will still drive easing.
This shift in rate expectations aligns with a broader anticipated change in monetary policy, as 54% of respondents expect the next Federal Reserve chair to deploy QE or consider yield-curve control to support market functioning and debt dynamics if needed. Fed chair succession expectations shifted toward Christopher Waller (20%) and Kevin Hassett (19%), followed by Kevin Warsh (15%) and Scott Bessent (13%).
Cash levels remained at 3.9%, staying below the 4.0% “sell-signal” threshold for the S&P 500, though global equity allocations rose for the fourth consecutive month to a net +14% overweight — the highest since February but still well below the 24-year average of 25% and the December 2024 peak of 49%.
At the regional level, valuation views diverged sharply. The survey found record-high perceptions of U.S. equity overvaluation, with a record net 91% labeling them overpriced, while emerging markets (EM) were viewed as the most undervalued since February 2024 at a net 49%.
This view was reflected in asset-allocation decisions. Positioning data showed a strong rotation into EM, now at a net +37% overweight — the highest since February 2023 — up from +22% in July. U.S. equity underweights narrowed to net −16% from −23% in July, while Eurozone overweights fell to net +24% from +41%, retreating from a four-year high.
Tail-risk perceptions were more evenly spread than in prior months: 29% cited “trade war triggers global recession” as the top risk (down from 38% in July), followed by “inflation prevents Fed rate cuts” at 27% and “disorderly rise in bond yields” at 20%. AI-equity bubble fears rose to 14%, while 6% flagged U.S.-dollar debasement.
The “Magnificent 7” re-emerged as the most crowded trade at 45%, overtaking July’s leader, “Short U.S. dollar” (now 23%), followed by “Long gold” at 12%.
Sector and style expectations rotated: 72% expect high-quality to outperform low-quality, 44% favor large- over small-caps, and 29% expect high-momentum to beat low-momentum. Demand for dividend yield and investment-grade credit eased, while value over growth garnered a modest net +5%.
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