Financial institution of America is flagging rising dangers on Wall Road as investor money ranges fall to report lows.
BofA’s December World Fund Supervisor Survey reveals international traders holding simply 3.3% of their portfolios in money, the bottom stage ever recorded, studies Barron’s.
The survey additionally finds allocations to shares and commodities at their highest ranges since February 2022, reflecting the strongest optimism for financial development in practically 4 and a half years.
Based on Financial institution of America’s personal historic framework, such situations have typically preceded weaker fairness efficiency.
The agency advises shopping for international shares when money allocations rise to five% or increased, whereas recommending promoting equities when money holdings fall under 4%. Present ranges are effectively beneath that threshold, the report notes.
“Liquidity is probably going nearly as good because it will get, which has buoyed shares in 2025, with numerous cash chasing just a few concepts,” Financial institution of America head of US fairness and quantitative technique Savita Subramanian says in a separate report cited by Barron’s.
Subramanian says she expects fewer rate of interest cuts from international central banks in 2026 and provides that authorities stimulus is prone to fade as US debt-to-GDP ranges attain traditionally excessive and uncomfortable ranges.
The survey additionally reveals fund managers carrying their largest obese place in equities since December of final yr, with know-how remaining probably the most favored sector.
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