The survey polled 211 fund managers representing $504 billion in assets under management .

Sentiment Turned Markedly Bullish

Global investor confidence climbed sharply in July. Fund managers grew more optimistic on the economic outlook, AI-linked spending, and the prospect of rate cuts from the Federal Reserve . The survey recorded the most significant increase in profit optimism since July 2020, and a record surge in risk appetite over the preceding three months .

Cash Allocations Hit an 'Exceptionally Low' Level

Average cash holdings dropped from 4.1% in June to 3.6% in July — a level BofA described as "exceptionally low" . This triggered the bank's proprietary Bull & Bear Indicator, which reached an extreme bull reading of 9.4. BofA's strategists interpret such a reading as a contrarian sell signal, suggesting investors should reduce equity and high-beta exposure .

Three Drivers of Renewed Bullishness

The turn in sentiment was attributed to three primary catalysts :

1. Macro 'boom' optimism — A growing number of managers expect a soft landing or a re-acceleration in global growth. A record 54% of respondents anticipated a "no landing" scenario, where the economy continues to expand above trend .
2. AI capex enthusiasm — AI-related spending remains a core bullish narrative. In the prior June survey context, 56% of managers still believed AI is in a "boom phase" .
3. Dovish Fed expectations — Managers anticipate the Federal Reserve will cut interest rates, a move that typically supports risk assets and equity valuations . Inflation expectations fell to their lowest since January 2025, partly reflecting a sharp drop in oil price forecasts .

Crowded Trades: Semiconductors at a Record

"Long global semiconductors" was identified as the most crowded trade in the market, cited by a record-high 82% of respondents . This marked an increase from 80% in the June survey, when it was already described as the most crowded trade in history .

Top Tail Risks: AI Bubble Overtakes Inflation

For the first time since the survey began tracking it prominently, "AI bubble" surged to become the number one tail risk, cited by 45% of respondents — a sharp jump from 28% in June . It overtook "second-wave inflation," which had been the top risk in recent months and fell to an estimated ~20% .

The tail risk ranking in July was :

Key takeaway: The same factor driving the bull case — AI enthusiasm — is now also the market's biggest perceived risk. This reflects the extremely concentrated nature of the rally in semiconductor and AI-related stocks . Combined with the low cash allocation and extreme Bull & Bear reading, the survey signals the risk of a contrarian pullback .

The survey polled 211 fund managers representing $504 billion in assets under management .

Sentiment Turned Markedly Bullish

Global investor confidence climbed sharply in July. Fund managers grew more optimistic on the economic outlook, AI-linked spending, and the prospect of rate cuts from the Federal Reserve . The survey recorded the most significant increase in profit optimism since July 2020, and a record surge in risk appetite over the preceding three months .

Cash Allocations Hit an 'Exceptionally Low' Level

Average cash holdings dropped from 4.1% in June to 3.6% in July — a level BofA described as "exceptionally low" . This triggered the bank's proprietary Bull & Bear Indicator, which reached an extreme bull reading of 9.4. BofA's strategists interpret such a reading as a contrarian sell signal, suggesting investors should reduce equity and high-beta exposure .

Three Drivers of Renewed Bullishness

The turn in sentiment was attributed to three primary catalysts :

1. Macro 'boom' optimism — A growing number of managers expect a soft landing or a re-acceleration in global growth. A record 54% of respondents anticipated a "no landing" scenario, where the economy continues to expand above trend .
2. AI capex enthusiasm — AI-related spending remains a core bullish narrative. In the prior June survey context, 56% of managers still believed AI is in a "boom phase" .
3. Dovish Fed expectations — Managers anticipate the Federal Reserve will cut interest rates, a move that typically supports risk assets and equity valuations . Inflation expectations fell to their lowest since January 2025, partly reflecting a sharp drop in oil price forecasts .

Crowded Trades: Semiconductors at a Record

"Long global semiconductors" was identified as the most crowded trade in the market, cited by a record-high 82% of respondents . This marked an increase from 80% in the June survey, when it was already described as the most crowded trade in history .

Top Tail Risks: AI Bubble Overtakes Inflation

For the first time since the survey began tracking it prominently, "AI bubble" surged to become the number one tail risk, cited by 45% of respondents — a sharp jump from 28% in June . It overtook "second-wave inflation," which had been the top risk in recent months and fell to an estimated ~20% .

The tail risk ranking in July was :

Key takeaway: The same factor driving the bull case — AI enthusiasm — is now also the market's biggest perceived risk. This reflects the extremely concentrated nature of the rally in semiconductor and AI-related stocks . Combined with the low cash allocation and extreme Bull & Bear reading, the survey signals the risk of a contrarian pullback .