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Fund cash at 3.5% as 56% of managers overweight stocks
A Bank of America survey found cash allocations slipped to 3.5% of total fund value while equity overweight reached 56%, its highest level in five years.
A Bank of America poll of institutional investors found fund managers are allocating more to equities even as “sell signals” tied to market risk gauges look increasingly negative. The survey tracks how strategists position assets across mutual, pension and other funds, including how much cash they hold relative to stocks and other holdings.
According to the report, as of August, managers were 56% overweight equities, the highest level in the last five years. At the same time, fund cash had fallen to 3.5% of total fund value, which the article describes as one of the lowest levels on record in the survey data.
The piece also points to widely followed market metrics that are used to flag potential downturns, including the CBOE Volatility Index, often called the “fear gauge,” and CNN’s Fear and Greed Index. It notes these gauges consider factors such as price swings versus historical averages, market bifurcation, and options-based put/call ratios.
Beyond the index calculations, the article highlights that direct sampling of financial professionals, through polls like Bank of America’s, can provide another read on risk appetite and positioning heading into the coming months, even when warning indicators are flashing.