What are fund managers investing in?

Fund managers are almost all-in on stocks.

Bank of America’s August Global Fund Manager Survey is the 3rd most bullish since 2022, with 180 managers overseeing more than $500B in assets.

• Cash levels: 3.5% — near historic lows

• Equity allocation: 5-year high

• 56% expect no landing or meaningful economic slowdown — a record

• Expectations for double-digit EPS growth: highest since August 2021

• U.S. and emerging-market equities remain among the most favored assets

• Semiconductors remain the most crowded trade, although concern has fallen from 83% to 52%

What are investors not worried about? Growth. Rate hikes. AI capex. U.S. politics. When cash is this low and bullishness this high, the question becomes: Is this confidence justified or is complacency becoming the biggest risk?

Jamie Dimon (CEO of JPMorgan Chase) warns that markets may be underestimating today's biggest risks. In a recent interview, he said investors appear too complacent about a growing mix of geopolitical and fiscal challenges.

He pointed to:

• The wars in Ukraine and the Middle East

• Rising tensions between the U.S. and China

• Increasing military spending alongside expanding government deficits

Dimon also said he would not be buying either equities or long-dated U.S. Treasurys at current valuations. "I do think those risks are probably bigger than other people think." — Jamie Dimon

Sources: BofA, Valérie Noël, CNBC