Investors Show Optimism for US Dollar and Stocks
According to the latest survey by Bank of America (BOFA), investors remain optimistic about the US dollar and stock markets. However, sentiment toward other assets appears largely negative, with a preference for riskier investments.
Risk-On Allocations, Bonds Least Popular Since 2022
The survey reveals that fund managers are maintaining a “risk-on” approach. Bond allocations are at their lowest levels since October 2022, and cash holdings have dropped to just 3.9%, reflecting a willingness to take on more risk.
European Equities Make a Comeback
European stocks have seen the second-largest increase in allocation in the past 25 years. Fund managers are turning to lagging European assets as they aim to capitalize on potential catch-up opportunities.
Popular Trades: Magnificent 7, US Dollar, and Crypto
The survey highlights the most crowded trades among fund managers. Leading the pack is the “Magnificent 7” tech stocks, with 53% of managers favoring these assets. Long positions in the US dollar (27%) and cryptocurrencies (13%) are also among the top trades.
Shift to Large-Cap Stocks, Value Investing Loses Appeal
Investors are moving back to large-cap stocks, reducing their interest in smaller companies. Additionally, fewer fund managers believe value stocks will outperform growth stocks, signaling a shift in market sentiment.
This survey underscores the growing investor confidence in equities and riskier assets, while bonds and other safe-haven investments continue to lose favor.
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