The big money is back. Honestly, if you felt like the market was getting a little too excited late last year, you weren't alone. But the latest BofA Global Fund Manager Survey shows that the world's most powerful portfolio managers have basically stopped worrying and started buying.
We’re talking about a massive shift in sentiment. Cash levels have crashed to a record low of 3.3%. To put that in perspective, Michael Hartnett, the Chief Investment Strategist at Bank of America, noted that this level of "run-it-hot" optimism has only been seen eight times this century. It's a crowded room. When everyone is this bullish, usually you'd expect a pullback, but right now, the momentum is just different.
What the BofA Global Fund Manager Survey is Telling Us Right Now
Investors are betting on a "soft landing" or "no landing" at all. Basically, they think the economy is going to keep humming along without a major recession. About 57% of those surveyed see a soft landing as the most likely outcome for 2026. Only 3%—that's a tiny sliver—are actually bracing for a hard landing.
It’s kind of wild how fast things changed. Just a few months ago, everyone was terrified of stagflation. Now? They’re piling into cyclical assets like commodities and industrials. The combined exposure to equities and commodities is at its highest point since early 2022. That was right before the inflation shock hit, so the parallels are a bit spooky if you're a contrarian.
The "Long Mag 7" Problem
The most crowded trade in the world is still "Long Magnificent 7." You know the names: Apple, Microsoft, NVIDIA, and the rest. According to the BofA Global Fund Manager Survey, 54% of managers say this is the most congested part of the market.
It's the ultimate "safe haven" that isn't actually safe if everyone tries to leave at once.
- Most Crowded Trade: Long Magnificent 7 (54% of respondents)
- Second Most Crowded: Long Gold (29%)
- Big Tail Risk: The AI Bubble (Still #1 at 38%)
Even though everyone is buying tech, they're also terrified of it. It’s a weird paradox. They can't afford to miss the AI gains, but they’re constantly looking for the exit sign in case the bubble finally pops.
Why 2026 Looks Different for Global Growth
For the first time in a long while, global growth expectations have actually turned positive. Managers aren't just hopeful; they’re acting on it. Allocation to emerging markets is sitting at a net 36% overweight. They expect a weaker US Dollar to provide the wind beneath the wings of international stocks.
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In fact, 42% of managers think international equities will be the best-performing asset class this year. That’s a huge vote of confidence for markets outside of Wall Street.
The New Risk: Private Credit
While everyone was watching inflation, a new ghost appeared in the machine: private credit. The BofA Global Fund Manager Survey recently added this to the top five "tail risks." Roughly 14% of managers are now worried that private equity or private credit could be the source of the next big credit event.
It makes sense. When rates stay "higher for longer" or just refuse to drop as fast as people hoped, those private loans start to look a lot more fragile.
Actionable Insights from the Latest Data
If you’re looking at these numbers and wondering what to do with your own portfolio, here are a few takeaways that aren't just corporate fluff:
- Watch the Cash Levels: When the FMS cash level drops below 4%, it’s usually a "sell" signal for stocks over the next 1-3 months. At 3.3%, we are deep in the "greed" zone.
- Diversify Away from the Crowd: If 54% of the world’s biggest pros are in the same seven stocks, maybe look at the sectors they’re ignoring. Energy and consumer staples are currently being treated like they’re radioactive.
- Keep an Eye on the 10-Year Yield: Most managers expect the 10-year Treasury yield to stay between 4% and 4.5%. If it breaks above that, the "no landing" narrative might fall apart fast.
- Follow the "Fiscal Impulse": With the US deficit still hovering around 6% of GDP, the government is essentially subsidizing the market. As long as that "One Big Beautiful Bill" (as some call the recent fiscal spending) keeps flowing, the floor under the economy stays relatively solid.
The bottom line is that the BofA Global Fund Manager Survey is currently shouting that the "pain trade" is to the upside. Most people were too cautious, and now they're scrambling to catch up. But remember, when the last bear turns into a bull, that’s usually when the music starts to slow down.
Keep your eye on the "AI monetization" metrics. As Savita Subramanian from BofA points out, "Buying the Dream" only works as long as the ROIIC (Return on Incremental Invested Capital) stays above the cost of capital. If the tech giants can't show real profits from all those chips they're buying, 2026 could get very interesting very quickly.