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Global fund managers polled in November by Bank of America Global Research were in their most bullish mood of the year, on the back of macro indicators and the promise of a coronavirus vaccine.

The survey was conducted Nov. 6 to 12 among 216 panelists with $573 billion in assets under management.

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Investors’ cash levels sank to 4.1% from 4.4%, and now are below the pre-pandemic level — cash levels stood at 4.2% in January.

BofA noted that the levels are close to triggering the fund manager cash rule, which holds that when average cash balance rises above 4.5%, a contrarian buy signal is generated for equities, and when the cash balance falls below 3.5%, a contrarian sell signal is generated.

The November survey found that fund managers’ global growth expectations rose by nine percentage points from October to net 91%, which is second only to March 2002 as the highest growth expectations, BofA said. Forty-four percent of respondents said they expected the global economy to be a lot stronger.

Sixty-six percent of investors said the global economy was in an early-cycle phase, the highest since March 2010, and just 19% said it was in recession. Net 84% expected global profits to improve.

The November survey indicated that 38% of CIOs want chief executives to increase capital expenditures, up 10 points from October, but 47% still wanted to see improved balance sheets. BofA said “escape velocity” would be signaled by fund managers’ capex intentions surpassing demand for improved balance sheets.

As to what path the global economic recovery will take, 39% of respondents said it would be W-shaped, 24% U-shaped and 23% V-shaped.

Although the coronavirus remained fund managers’ top tail risk in November, they continued to pull forward timing for a credible vaccine, from February to January.

Asked for their three favorite trades for the year ahead, investors said long emerging markets was number one, long S&P 500 two and long oil three.

Sixty-five percent considered long U.S. tech the most-crowded trade in November, trailed by 11% who said short banks and 9% who said long corporate bonds.

BofA reported that an all-time high 73% of investors expected a steeper yield curve.

Fund managers’ allocation to equities rose to net overweight 46%, the highest level since January 2018, while allocation to cash stood at 7%, the lowest level since March 2015.

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