Why fund managers are still bullish
Recent optimism refuses to go away, writes Dave Baxter.
16th June 2026 13:58
by Dave Baxter from interactive investor
Professional investors remain “steadfastly bullish”, although concerns about inflation and a potential market bubble continue to cause some worry.
The latest edition of Bank of America’s global fund manager survey found a high degree of optimism about future global growth and profits, even if participants slightly upped their cash levels, from 3.9% to 4.1%.
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Investors trimmed their overweight allocation to global equities from 50% to 38%, slightly moderated their overweight to tech stocks and cut European shares, down to their biggest underweight since December 2024. They bought the likes of Japanese equities and banks, and now view gold as fairly valued for the first time since February 2024. Respondents are also overweight on emerging markets.
Bank of America noted that traders had “taken summer chips off the table” to an extent, rather than getting overly worried about markets.
When asked to identify the biggest tail risk for markets, 34% of respondents pointed to a second wave of inflation, with 28% choosing an artificial intelligence (AI) bubble as an option. The most crowded trade is “long global semiconductors” at 80%, which represents an all-time high.
Fears of stagflation taking hold eased slightly, from 69% a month ago to 58%. In a recent On The Money podcast episode, we explored what stagflation is and what it means for portfolios.
Appearing on the podcast, Tom Becket, co-chief investment officer at Canaccord Wealth, pointed out that if stagflation were to materialise and consumers were to tighten their belts this could lead to “a situation where defensive, dependable companies start to be rerated, and cyclical companies are left behind”.
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It’s also worth noting that more respondents expect interest rates to rise, with 40% expecting a hike from the Federal Reserve in the next 12 months. This compares to 16% a month ago.
The survey polled 172 fund managers overseeing $465 billion (£347 billion) in assets.
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