Investor activity in December indicates that the bulls are back, according to the latest fund manager survey from Bank of America Global Research.
Allocation to global equities shot up by 10 percentage points month on month to 31% overweight, the highest level in a year.
Investors continued to sell bonds for equities in December as bond allocation ticked down one point to 48% underweight, the most underweight since November 2018.
Cash levels held to 4.2%, the lowest balance since March 2013, keeping the fund manager cash rule in “neutral” territory for the second month in a row.
The cash rule holds that when average cash balance rises above 4.5%, a contrarian buy signal is generated for equities. When the cash balance falls below 3.5%, a contrarian sell signal is generated.
Investors’ cash allocation remained steady at 18% overweight, below the long-term average of 21%, and the lowest allocation since November 2015.
The survey was conducted Dec. 6–12 among 247 panelists with $745 billion of assets under management in total.
Fund managers’ global growth expectations surged 22 points from the November survey to net 29% of investors expecting improvement over the coming year. This marked the biggest two-month increase in growth expectations on record, according to the report.