Bank of America’s monthly survey of fund managers captured a sharp reversal in sentiment this month, with optimism falling rapidly after recent highs.
The survey recorded the second-largest decline in global growth expectations in its history, sliding from -2% in February to -44% in March. Allocations to U.S. equities experienced their biggest drop ever, while cash holdings increased from 3.5% to 4.1% — the largest rise since March 2020.
Bank of America strategists point to growing concerns about stagflation, escalating trade tensions, and a perceived end to “U.S. exceptionalism” as driving the shift. Yet the survey also shows that only 11% of respondents expect a hard landing, indicating that overall positioning has not moved to an extreme bearish stance.
The strategists add that for the S&P 500 to climb above 6,000 in the second quarter, inflation pressures and trade-war fears would need to ease significantly. Conversely, a recession could push the index below 5,000. Based on these scenarios, they outline contrarian investment approaches aimed at preparing for either a bullish rebound or a more negative outcome.
In short, the latest Bank of America survey signals a notable pullback in investor confidence, driven by macroeconomic and geopolitical worries, even as widespread expectations of a severe downturn remain limited. Fund managers appear to be increasing cash buffers and reducing equity exposure, reflecting caution while stopping short of fully embracing a defensive, all-in bearish stance.