Why fund managers are building up their cash piles
A wild optimism of recent months has softened.
15th September 2026 11:53
by Dave Baxter from interactive investor
Professional investors have upped their cash position as the “excess bullishness” of the summer weakens slightly.
The latest Global Fund Manager Survey from Bank of America pointed to plenty of enduring optimism among respondents.
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It noted that investor expectations for economic growth, and for a boom prompted by capital expenditure on artificial intelligence (AI), remained strong, but that worries had grown both about the sell-off in the bond market and the prospect of a Democrat “sweep” in the US mid-term elections.
As such, some of the intense bullishness of recent months has lessened, with respondents upping their cash position from 3.5% to 3.9%. That’s the biggest monthly rise in cash levels since March.
The survey’s broadest measure of sentiment, which is based on a combination of cash levels, equity allocations and global growth expectations, fell from a reading of 8 to 7.
Investors still seem relaxed about the state of the global economy, with 55% of respondents expecting “no landing” for the economy, versus 56% in August. Some 38% expect a soft landing with just 2% anticipating a hard landing.
Interestingly, inflation expectations have reversed, with a net 4% of respondents expecting lower global inflation in the next 12 months, versus a net 3% expecting an increase.
A net 36% expect higher short-term interest rates, the highest such reading since September 2022.
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Worries about inflation and interest rate rises have prompted a nasty sell-off in the bond market in recent weeks.
The yield on a 10-year US government bond has pushed above 5%, hitting its highest level since the financial crisis.
That has played on the minds of respondents to the survey, with 33% pointing to a “disorderly rise in bond yields” as the biggest tail risk for markets.
Investors were a net 48% underweight on bonds, the biggest underweight position here since May 2022.
However, it’s worth noting that respondents have been underweight bonds for the past 17 months already.
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