Conducted between May 8 and May 14, 2026, the survey polled 200 panelists overseeing a massive $517 billion in assets, revealing a landscape defined by extreme “risk-on” positioning.
The Cash Level Warning
The most immediate red flag lies in fund manager cash levels, which dropped to 3.9% from 4.3% month-over-month. This represents the largest monthly decline since February 2024.
Historically, when cash levels dip below the 4% mark, it triggers a “sell signal” for global equities. Since 2011, this signal has been followed by a median 4-week loss of 1% in global stocks, with the most severe corrections reaching as high as 29%, according to BofA.
Hard Landing Vs Soft Landing
Just 4% of managers now expect a “hard landing,” down from 9% last month. Instead, the consensus has shifted toward a “soft landing” (46%) and a resilient “no landing” scenario (39%), as the outlook for economic stability improves.
However, this optimism hasn’t erased fears of a second inflationary surge. A dominant 40% of managers cite a “second inflation wave” as their primary tail risk, significantly overshadowing geopolitical conflicts (20%) and bond yield volatility (18%).
The survey paints a cautious picture for fixed income. With 30-year US Treasury yields at their highest levels since August 2008, 62% of fund managers expect these yields to touch the 6% threshold. Expectations for Federal Reserve rate cuts are lukewarm, with a combined 58% of respondents expecting either no change or just one cut.
While 50% of managers believe AI stocks are not in a bubble, the market is undeniably crowded. “Long global semiconductors” was identified as the most crowded trade by as many as 73% of respondents.
Lastly, even as crude oil prices continue to remain above $100 a barrel, only 7% of the total number of fund managers surveyed by BofA are expecting these levels to sustain over the next 12 months. Majority of them are expecting oil to trade in the $70 to $90 range during this period.
