Bank of America Reports Fund Managers’ Optimism Hits New Highs in October

Large fund managers’ optimism reached a new high of 5.8 — the highest since February 2025, according to an October Bank of America report cited by MarketWatch. The organization conducts this survey monthly, with global fund managers overseeing over $468 billion in assets participating.

Fund Manager Optimism Hits New Highs

Optimism has risen significantly since the start of the U.S.-China trade war and is nearing the interim peak recorded following Donald Trump’s election in February 2025. On a monthly basis, the optimism level increased by 0.5 points.

Expectations for a U.S. recession have fallen, hitting a new low in February 2022, with 69% of respondents indicating such a scenario is unlikely. For comparison, in April 2025, when the annual maximum of the indicator was recorded, this figure was 42%.

In addition, 59% of fund managers believe there is excess liquidity in the market — the highest level since September 2021. Sixty percent think global stocks are overvalued, compared to 22% for bonds.

Fifty-four percent expect a ”soft landing” for the global economy, the highest figure in six months. Thirty-three percent believe the economy will not slow or contract despite high interest rates, while 8% anticipate a ”hard landing.”

Cash on fund managers’ balance sheets has decreased slightly from 3.9% to 3.8%. The Bank of America bullish/bearish market indicator stands at 6.5, considered neutral with a bias toward optimism. Readings between 8 and 10 signal strong bullish sentiment.

Fund managers’ overweight positions in equities reached 45%. By sector, allocations increased for equities, real estate investment trusts, and utilities, including energy providers. Conversely, exposure to government bonds, telecom stocks, and cash declined.

Major Trades and Risk Perceptions

The most overextended trade is a long position on gold, favored by 43% of respondents, surpassing the long on the Magnificent Seven stocks reported in September.

Thirty-three percent of fund managers identified the AI sector as the biggest risk, calling it a ”bubble,” up 22% from the previous month. Inflation follows at 27%, and the loss of the Federal Reserve's independence ranks third at 14%. Only 5% cited a trade war as the main risk, compared to 80% in April 2025.

Overall, BofA experts note rising bullish expectations among investors, coupled with declining recession concerns and undervaluation of fiat currencies, signaling general market optimism.