Revealed: extreme portfolio positions of global fund managers

Fund managers have grown even more positive about the outlook for markets, in part thanks to a brighter view of the global economy.

The latest Bank of America Global Fund Manager Survey said this month’s participants were feeling optimistic about the macroeconomic picture, the effects of spending on artificial intelligence (AI) infrastructure and the trajectory of monetary policy.

• Our Services: SIPP Account | Stocks & Shares ISA | See all Investment Accounts

That has manifested itself in some extreme portfolio positioning, with cash levels dropping from 4.1% last month to an “uber low” of 3.6%.

Fund managers have meanwhile established the biggest overweight position on US equities since December 2024, with more forecasting an economic boom than at any time since February 2022.

The latest reading relates to optimism on multiple fronts. A record 54% of respondents said they expected “no landing” for the economy in the next 12 months, while a net 21% expected a stronger economy. That second reading marks a five-month high for such expectations.

Professional investors also seem to have stopped worrying about inflation even as uncertainty prevails over the situation in the Middle East.

A net 4% of respondents said they expect lower global inflation, something Bank of America described as a “big flip” from June, when a net 45% expected inflation to move higher.

• Funds and trusts four pros are buying and selling: Q2 2026
• DIY Investor Diary: shifting from 25 holdings to 50

Investors are similarly relaxed about monetary policy, with 83% of respondents saying they did not expect the Federal Reserve to raise interest rates before the US midterm elections.

...and back to AI

Beyond macroeconomics, fund managers remained positive about the outlook for AI.

When asked if one of the AI hyperscalers would announce a cut to spending in 2026, 61% of respondents said they would not.

Meanwhile, 48% of respondents believe AI stocks are not in a bubble, versus 43% who said they were.

If that result suggests that AI worries still persist, this was confirmed by “AI bubble” being named as the biggest tail risk for markets, as per 45% of respondents.

The survey identified going long on global semiconductor shares as the most crowded trade, with AI hyperscaler spending seen as the most likely source of a credit event.

• Eight UK shares the pros are finding plenty of value in
• Sign up to our free newsletter for investment ideas, latest news and award-winning analysis

In terms of portfolio positioning, investors did trim their tech positions to hedge AI risks.

It’s also worth noting that UK equities are especially out of favour, with investors reducing their allocation to a net 37% underweight, the lowest level since August 2020.