Global investors charged deeper into equities and commodities in November, but sharply reduced cash positions to just 3.7% — a level low enough to trigger Bank of America’s contrarian “sell signal”, according to its latest monthly fund manager survey.
The survey warns that investor positioning has become increasingly bullish and crowded, raising the risk of downside pressure on markets if the Federal Reserve fails to cut rates in December. The most vulnerable segments? Emerging markets and banks, which respondents say could face the biggest hit in a Q4 2025 risk-off move.
AI bubble fears dominate market psychology
A striking 45% of investors called an AI bubble the biggest tail risk, while a record share said companies are “overinvesting,” suggesting hyperscalers’ capital spending may have reached unsustainable levels. Unsurprisingly, tech positioning remains crowded: 54% of respondents identified “long Magnificent 7” — the largest Wall Street stocks — as the most overcrowded trade in the world.
Risk positioning hits multi-year highs
The survey, titled “Cash poor, capex rich, rate-cut needy”, shows investors are:
- Net 34% overweight global equities — the highest since February
- Most overweight commodities since September 2022
Macro sentiment improved significantly, with global growth expectations turning positive for the first time this year, and 53% of fund managers expecting a soft landing. Yet caution remains:
- 63% believe global equities are overvalued
- 59% cite private equity/private credit as the most likely source of the next systemic credit event — the strongest conviction since 2022
The survey sampled 172 fund managers overseeing $475 billion in global assets between November 7–13.
As markets ride a wave of optimism but cash dries up, Bank of America’s warning suggests investors may be stepping onto thinner ice — where one missed rate cut or macro shock could shift sentiment rapidly.