A Bank of America fund manager survey showed a new low on cash allocation going back to at least 2001. The data shows super-bullish sentiment,' the firm's investment strategist Michael Hartnett wrote to clients. A closely watched survey of global fund managers registered its lowest cash allocation on record this month, underscoring a bullishness on stocks as the equity market nears the end of a strong year.
The average cash allocation level of participants in Bank of America's Global Fund Manager Survey fell to 14% underweight, according to data released by the bank on Tuesday. That's the largest underweight position for currency compared with stocks since at least 2001, when the survey began, the firm said.He cited interest rate cuts from a'compliant' Federal Reserve and expectations for growth under President-elect Donald Trump as drivers of the rush into stocks. For the former, traders will get a reading of the Fed's thinking on Wednesday when the central bank delivers its final interest rate decision of the year in the afternoon. Fed funds futures are pricing in a more thanThat stat of net 14% underweight on cash marks a significant turn from the 4% net overweight reading in November. This 18 percentage point drop in cash allocation was the largest monthly decline in around half of a decade, according to Bank of America data.What's more, the average cash level of surveyed managers fell to 3.9% from 4.3% of assets under management, hitting a new low going back to June 2021. That marked the second time in the last three months that this level fell below the key 4% mark, which Hartnett said triggers a contrarian sell signal. This stems from the idea that with a heavy concentration in stocks, there isn't much cash left to push the market higher. Holding cash can be considered a safe bet for investors who want to keep assets on the sidelines if there's expected volatilit