According to the latest Bank of America (BofA) survey, cash levels among global fund managers fell to 3.5% in February 2025, the lowest level since 2010. This decline indicates investors’ increased confidence in equity markets and their willingness to shift funds from cash to riskier assets.
The BofA survey, which included 168 participants managing $401 billion in assets, showed that investors have reduced their cash reserves in favor of stocks while focusing on bond-sensitive sectors such as pharmaceuticals, biotechnology, utilities, and real estate investment trusts (REITs). Thus, one might conclude from this data that fears of a global recession are diminishing and the risk of a trade war is considered minimal.
EuroStoxx (22%), Nasdaq (18%) and Hang Seng (18%) were identified by survey participants as the best performing equity indices. Within broader asset classes, global equities were preferred by 34% of respondents, followed by gold at 22% and US equities at 18%.
At the same time, an interesting finding is that 89% of investors consider U.S. stocks overvalued, suggesting possible caution when investing in the U.S. market. Nevertheless, among the most popular trading strategies is still the so-called “Long Mag 7”, referring to the seven major technology companies in which investors continue to put their funds.
In terms of regional preferences, investors have a strong interest in European deals. Allocations to the Eurozone have reached an 8-month high, while exposure to US equities has fallen to an 11-month low. Again, this reflects concerns about the overvaluation of US equities, while also indicating growing confidence in European markets.
More broadly, the survey showed that 77% of investors expect the US Federal Reserve (Fed) to cut interest rates later this year. Expectations of a so-called “soft landing” for the economy, i.e. a slowdown in growth without a significant recession, increased from 50% to 52%. Despite this positive outlook, 39% of fund managers are concerned about a potential trade war, which they see as the biggest risk to markets.
