Fund managers are no longer bearish about stocks

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Risk appetite has increased but remains low despite strong gains of recent months

The percentage of fund managers underweighting stocks is the lowest in 16 months, while technology stock allocations have hit their highest level since December 2021.Bull markets climb a wall of worry, so bearish positioning has been a “strong tailwind” for stocks in 2023, but that’s no longer the case. So says Bank of America’s latest monthly fund manager survey, with bearishness falling to its lowest level since February 2022. Three out of four expect a soft or no economic landing.

Earnings optimism is the highest in 18 months. The percentage of fund managers underweighting stocks is the lowest in 16 months, while technology stock allocations have hit their highest level since December 2021. Cash allocations have fallen sharply, from 5.3 to 4.8 per cent. That’s a 21-month low, and means BofA’s cash rule is no longer in buy signal territory .

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