MILAN (Reuters) -Global investors raised equity and commodity allocations in November, but with cash levels at just 3.7%, bullish positioning is now seen as a headwind for risk assets, Bank of
BofA Survey Signals Sell Alert as Investors Increase Risk Exposure
Investor Sentiment and Market Trends
MILAN (Reuters) -Global investors lifted equity and commodity allocations in November, but cash holdings fell to just 3.7%, triggering Bank of America's "sell signal" and raising concerns that bullish positioning could act as a headwind for risk assets, its monthly fund manager survey showed on Tuesday.
The November survey warned that frothy markets may face further downside without a Federal Reserve rate cut in December, with emerging markets and banks seen as most exposed to a risk-off move in the final quarter of 2025.
An AI bubble was the biggest tail risk for 45% of respondents, and a record share of investors said companies are "overinvesting", a sign spending by hyperscalers may need to slow down. Positioning remains crowded in technology, with 54% naming "long Magnificent 7" - the seven largest Wall Street stocks by market value - as the most crowded trade.
Equity and Commodity Allocations
The survey, titled “Cash poor, capex rich, rate-cut needy”, showed investors are net 34% overweight global stocks, the highest since February, and most overweight commodities since September 2022.
Concerns Over Market Valuation
Macro sentiment improved this month, with global growth expectations turning positive for the first time this year and 53% forecasting a soft landing.
Systemic Credit Event Risks
Still, a record 63% believe equity markets are currently overvalued. And, asked about the most likely source of a systemic credit event, 59% mentioned private equity/private credit, the highest conviction since 2022.
The global survey of 172 fund managers overseeing $475 billion was conducted between November 7 and 13.
(Reporting by Danilo Masoni; Editing by Amanda Cooper)
