Bofa Poll Shows Investors Flocking to Risk Assets at Record Levels

Fund managers are making a swift and aggressive return to riskier investments, driven by renewed optimism over economic growth prospects and solid corporate earnings, according to Bank of America’s latest monthly survey.

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The report highlights that the risk appetite among investors is now at its highest level in over two decades, based on a rolling three-month average dating back to 2001. A surge in confidence is reflected in rising allocations to both U.S. and European equities, with technology stocks seeing particularly strong inflows.

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As the S&P 500 hits fresh record highs, investor sentiment has shifted decidedly bullish. Many are placing bets on continued market gains, bolstered by expectations that the U.S. economy will successfully navigate ongoing trade negotiations. Michael Hartnett, chief investment strategist at Bank of America, said in the survey summary that he doesn’t foresee any significant pullback in stock prices over the summer.

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He also noted that current equity exposure levels haven’t yet reached dangerous extremes and that bond market volatility remains subdued, reinforcing the case for staying invested in stocks.

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According to the July survey, which polled 175 fund managers overseeing a combined $434 billion in assets between July 3 and July 10, investor allocation to U.S. stocks rose at the fastest pace since December. Meanwhile, technology stocks posted their largest three-month inflow since 2009, during the post-financial crisis rebound. In Europe, fund managers were the most overweight on euro-zone equities in four years — a sign of growing confidence in the region’s economic prospects.

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A notable shift in sentiment also emerged regarding the outlook for corporate earnings. Optimism in this area jumped at its fastest rate since 2020, when companies began rebounding from the pandemic-related downturn.

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The survey revealed that 59% of respondents no longer expect a U.S. recession within the next year, a dramatic reversal from earlier in 2025 when concerns spiked after former President Donald Trump reintroduced tariffs during his so-called "Liberation Day" policy announcement in April.

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While optimism is on the rise, fund managers remain aware of potential risks. The survey also captured a list of the top tail risks that investors are monitoring closely. The biggest concern cited was the possibility that a trade war could push the global economy into recession. This was followed by fears that persistent inflation might prevent the Federal Reserve from cutting interest rates, a scenario that could stifle economic momentum and weigh on asset prices. A sharp decline in the U.S. dollar ranked as the third most significant risk.

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Interestingly, expectations around tariffs have crept higher. Fund managers now anticipate that the U.S. will eventually impose an average final tariff rate of 14% on its trade partners, up slightly from the 13% estimate in June. While this reflects some unease about trade policy, it hasn’t been enough to dampen risk appetite in the current environment.

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The survey also revealed insights into what investors believe are the most crowded trades in today’s market — positions that are widely held and could be vulnerable if sentiment turns. Shorting the U.S. dollar topped the list, cited by 34% of respondents.

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This was followed by long positions in the Magnificent Seven (the group of high-performing U.S. tech giants), which accounted for 26% of the most crowded trade responses. Gold came next at 25%, reflecting lingering concerns about inflation and currency instability. European equities, despite their recent popularity, were considered a crowded trade by only 6% of participants.

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Overall, the results reflect a significant shift in investor psychology from earlier in the year. Fears of a looming recession are giving way to expectations of resilient economic growth, especially as corporate profits remain strong and central banks appear cautious about tightening too quickly. The booming AI sector and a resilient labor market have also helped fuel confidence in sustained earnings growth.

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Yet even with growing risk-taking behavior, the survey suggests that most fund managers remain cautious enough to avoid full-blown exuberance. The bullish tilt is supported by improving fundamentals, but many are keeping an eye on potential pitfalls — from trade tensions to inflation and currency volatility — that could test the market’s recent highs.

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As fund managers ramp up their exposure to stocks, particularly in tech and developed markets, the months ahead will likely test whether this renewed confidence can hold amid evolving policy risks and geopolitical uncertainty.

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