Investors remain highly optimistic about global stocks while showing skepticism toward other asset classes, as cash levels drop to their lowest point since 2010, according to a Bank of America survey of fund managers. However, despite their enthusiasm for equities, 89% of respondents believe U.S. stocks are overvalued.
Stock Market Performance
The benchmark S&P 500 index gained 0.2% on Tuesday and has climbed 4.2% so far in 2025. Meanwhile, MSCI’s ACWI, a broad measure of global equities, rose 0.27% on Tuesday and has advanced 5.5% year-to-date.
Economic Outlook and Recession Fears
Concerns over a global recession are at a three-year low, with 52% of fund managers expecting a soft landing, 36% predicting no landing, and only 6% fearing a hard landing, according to analysts led by Michael Hartnett. Optimism about China’s economic recovery has also improved among investors.
Trade War and Safe Haven Assets
While a potential trade war is seen as a minor risk, 58% of surveyed investors believe gold would be the best-performing asset in such a scenario, followed by the U.S. dollar (15%) and 30-year Treasuries (9%).
Interest Rate Expectations
Regarding U.S. interest rates, 77% of respondents expect the Federal Reserve to cut rates at least once this year, while just 1% anticipate a rate hike.
