Investors still bullish, but positioning is a headwind for markets – BofA survey

MILAN (Reuters) -Global investors raised equity and commodity allocations in November, but with cash levels at just 3.7%, bullish positioning is now seen as a headwind for risk assets, Bank of America’s monthly fund manager survey showed on Tuesday.

The bank said the current froth in markets could bring a further downward correction without a Federal Reserve rate cut in December, with emerging markets and banks seen as being most vulnerable to a proper risk-off move in the final quarter of the year.

The survey flagged crowding in tech, with 54% naming "long Magnificent 7" as the most crowded trade and 45% citing an AI bubble as the biggest tail risk, while for the first time in 20 years investors said companies are "overinvesting", a sign spending by hyperscalers may need to "slow down".

The global survey of 172 fund managers with $475 billion under management, titled "Cash poor, capex rich, rate cut needy" was conducted between Nov. 7 and 13.