Global investor optimism has climbed to its highest since June 2022 as fears of a recession in the US and China receded, according to Bank of America's newest survey of fund managers.
Amounts held in cash have dropped to 3.9% from 4.2% while equity allocations rose to a net 31% overweight.
Bond allocations suffered a record drop to a net 15% underweight, said the survey respondents.
"Our broadest measure of (fund manager survey) sentiment, based on cash levels, equity allocation, and economic growth expectations, rose from 3.8 to 5.6, its largest monthly rise since Jun’20," BofA said.
Reuters pointed out however that the sharp drop in cash holdings has prompted a ‘sell’ signal on BoA’s own metrics.
BoA’s sell signals are based on the performance of MSCI's All-World index (ACWI), the acknowledged proxy for global equity investing, which is up 0.6% so far in October, and heading for its sixth monthly rise.
"Since 2011, there have been 11 prior 'sell' signals which saw global equity (ACWI) returns of -2.5% in the 1 month after and -0.8% in the three months after the 'sell' signal was triggered," said BoA.
At the time of writing, the MSCI was up further at US$120.78, or 0.5%, to a five-year high.