February 2026 Bank of America Global Fund Manager Survey

The February 2026 Bank of America Global Fund Manager Survey depicts an exceptionally optimistic investor backdrop, with overall sentiment reaching its most bullish level since June 2021. The composite FMS sentiment gauge rose to 8.2 from 8.1, driven by stronger growth expectations, elevated equity allocations, and still-low cash levels.

A net 39% of managers now expect a stronger global economy over the next 12 months, up from 38% in January and 18% in December, while net 52% see a “no-landing” outcome for global growth—a record high,

and 36% (up from 34%) anticipate a “boom” (above-trend growth and inflation), the strongest reading since February 2022.

However, the longer history shows that stagflation expectations remain structurally elevated relative to the pre-2020 period, highlighting that inflation risk has not been fully priced out despite optimism on growth.

This is consistent with a renewed upswing in inflation expectations, as a net 9% of managers now expect global CPI to be higher year over year over the next 12 months, a notable reversal from the deflationary lean seen in early 2025 and one that historically aligns with late-cycle phases rather than early expansions.

Similarly, a majority now believe long-term bond yields will rise, with net 57% expecting higher long rates—the most since February 2022—while net 46% still expect lower short-term rates, pointing to a consensus for curve steepening.

Earnings optimism has strengthened in parallel, with net 24% expecting double-digit global EPS growth, the highest since August 2021.

Despite strong risk appetite, cash levels have edged up modestly to 3.4% of AUM from January’s record low of 3.2%, marking the first increase in seven months but remaining historically depressed.

Positioning data underscore an aggressively risk-on but increasingly late-cycle profile. Global equities remain the largest overweight at a net 48%, the highest since December 2024,

while bond allocations are net 40% underweight, the deepest underweight since September 2022.

Commodities are net 28% overweight, the most since mid-2022,

and combined equity-plus-commodity exposure stands at a net 76%, a level last seen in early 2022, even as this positioning has diverged sharply from still-subdued manufacturing PMIs.

Regionally, February saw a pronounced rotation away from U.S. assets and toward emerging markets and Europe: U.S. equities fell by 20 percentage points from near-neutral in January, with most of that reduction reallocated to Eurozone and emerging-market equities. Emerging-market allocations rose to a net 49% overweight—the highest since February 2021—while Eurozone equities climbed to a net 35% overweight.

Currency positioning mirrors this shift, with a record net 23% overweight in the euro.

Style and sector preferences reinforce the sense of a maturing cycle. Investors have rotated away from prior growth and momentum leaders toward value, quality, income, and cyclicals. Technology exposure has been sharply reduced, small caps are now favored over large caps by the widest margin since April 2021,

and net 43% expect value to outperform growth, the highest since April 2025.

Expectations for high-quality earnings, high-dividend strategies, and balance-sheet strength have risen decisively, while enthusiasm for pure momentum has fallen back to low single digits.

Sectorally, investors reduced exposure to technology—now only net 5% overweight, down from 19%—and increased allocations to energy, materials, and consumer staples, marking the strongest resources-led rotation since 2022.

At the same time, warning signals are accumulating beneath the bullish surface. The BofA Bull & Bear Indicator rose to 9.5 from 9.4, extending a contrarian “sell” signal that has been in place since mid-December, highlighting the risk of crowded positioning as Q1 progresses. Capital expenditure concerns are central to this tension: a record net 35% of investors now say companies are overinvesting, the highest level in over two decades, and CIOs are increasingly urging balance-sheet repair rather than further capex expansion.

Relatedly, preferences for the use of corporate cash flow show a clear shift away from incremental capital spending and toward balance-sheet repair, with the share of investors favoring improved balance sheets rising sharply while support for higher capex continues to fall, reinforcing the view that investment spending is “too hot” even as growth expectations remain strong.

This anxiety is closely linked to AI spending, with “AI bubble” cited as the top tail risk by 25% of respondents (down from 27% in January), followed by inflation (20%) and a disorderly rise in bond yields (17%),

while private equity and private credit are still seen by 43% as the most likely source of a systemic credit event.

Crowding indicators underscore late-cycle dynamics, with “long gold” identified as the most crowded trade for a second consecutive month at 50%, well ahead of “long Magnificent Seven” at 20% and “short U.S. dollar” at 12%.

On policy and politics, 38% of respondents believe a potential Kevin Warsh nomination as Fed chair would lead to higher Treasury yields and a weaker dollar,

and 62% expect a divided outcome in the 2026 U.S. midterms, with a Democratic House and Republican Senate.

Finally, risk appetite, while still elevated, appears to have plateaued rather than accelerated further. Managers report taking net 14% higher-than-normal risk relative to benchmarks, slightly below late-2025 levels and well below prior cyclical extremes, suggesting that positioning is already aggressive but incremental risk-taking is slowing.

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