Bank of America's Global Fund Manager Survey reveals a sharp shift to bearish sentiment among investors in March, driven by concerns over the Iran conflict, private credit markets, and rising inflation expectations. The survey of 210 fund managers with $589 billion in assets showed increased cash holdings and significant portfolio rotations.
Global investors significantly shifted to a bearish outlook in March, driven by escalating concerns related to the ongoing conflict with Iran and mounting unease surrounding private credit markets. This shift marked an end to several months of investor optimism, according to Bank of America's (BofA) monthly Global Fund Manager Survey, released on Tuesday. The survey involved 210 fund managers who collectively manage $589 billion in assets. Cash levels among these managers surged to 4.
3% of portfolios, up from 3.4% in February. This represented the largest single-month increase since the onset of the COVID-19 pandemic in March 2020. BofA employs cash levels as a contrarian indicator. They issue a 'sell' signal when cash levels fall to or below 4%, indicating that managers are fully invested and markets are vulnerable. Conversely, a 'buy' signal is triggered when cash rises to 5% or above, suggesting excessive fear in the market. The March surge brought cash levels back above the sell-signal threshold, returning the indicator to a neutral position.\Overall market sentiment, as assessed by BofA's composite indicator, declined from 8.2 to 5.6, reaching a six-month low. However, this level remained considerably above the 1.8 trough observed during last April's Liberation Day selloff. The shift in sentiment was particularly pronounced on the macro front. The proportion of managers expecting a stronger global economy over the next 12 months plummeted to a net 7%, down from 39% in February. Simultaneously, inflation expectations surged, with a net 45% of managers anticipating higher inflation, compared to a net 9% the previous month. This represents the initial signs of what BofA strategists termed a “second wave higher” in price pressures. Moreover, expectations for interest rate cuts reached their lowest level since February 2023. Despite the prevailing gloom, recession fears remained relatively muted. Only 5% of respondents anticipated a hard landing for the global economy, with 46% forecasting no landing and 44% expecting a soft landing. Geopolitical conflict emerged as the foremost concern among investors, cited as the biggest tail risk by 37% of respondents, a significant increase from 14% in February. The previous top concern, an AI bubble, diminished significantly, cited by only 10% of respondents. Private equity and private credit continued to top the list of potential sources of a systemic credit event for the eighth consecutive month, with 63% of managers expressing this concern. A separate BofA measure of credit default risk also rose sharply, reaching its highest level since April 2025. A net 46% of managers indicated that credit risk was above normal levels, up from 17% in February.\The changing outlook prompted substantial portfolio adjustments. Managers reduced their holdings in banks, European equities, and consumer discretionary stocks, the latter reaching its most underweighted position since December 2022. Simultaneously, they increased allocations to Japan, healthcare, and cash. Commodity allocations reached their highest overweight since April 2022, while emerging market equity overweights hit their loftiest level since February 2021. Allocations to U.S. equities remained underweight, with managers holding a net 17% underweight position, a slight improvement from the previous month’s 22% underweight. Gold and global semiconductors were identified as the most crowded trades, each cited by 35% of respondents. The Magnificent Seven trade, which peaked at 54% in December, has largely unwound, with only 9% now considering it the most crowded position. The oil market reflects the same war-premium skepticism. With Brent crude trading around $102 per barrel, managers' weighted average year-end price forecast is $76, and only 11% expect prices to remain above $90 by December. BofA's strategists noted that while sentiment has turned bearish enough to justify contrarian trades, such as selling oil above $100 and buying 30-year Treasuries at a 5% yield, positioning data hasn't reached the extreme levels seen at major market lows. In terms of political outlook, 54% of managers anticipate the 2026 midterm elections will result in a split Congress, with Democrats retaking the House and Republicans retaining control of the Senate. The probability of a Democratic sweep has increased to 28%, up from 11% just two months ago
Investor Sentiment Global Markets Economic Outlook Geopolitical Risk Private Credit
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Men’s March Madness Selection Sunday Live Updates: Seeds, Matchups and AnalysisMarch Madness is finally upon as the selection committee will name the 68 teams competing in the NCAA tournament. Follow along with SI.
Read more »
March Madness Brackets: Expert Predictions for the 2026 Men’s NCAA TournamentSports Illustrated writers make their round-by-round picks and which teams will advance to the Final Four in Indianapolis.
Read more »
Costco Recalls Meatloaf Meal Kit Due to Potential Salmonella ContaminationCostco has issued a recall for its ready-to-eat meatloaf meal kit, sold in 26 states, the District of Columbia and Puerto Rico, due to potential Salmonella contamination. The recall follows concerns raised by ingredient supplier Griffith Foods Inc. The affected product, sold between March 2 and March 13, has sell-by dates from March 5 to March 16. Customers are advised not to consume the product and can return it for a full refund. No illnesses have been reported.
Read more »
'No Kings' protesters to march to Washington State Capitol on March 28The team that brings you MyNorthwest.com.
Read more »
Mastriano claims Gettysburg's 'sharp left turn' has gone too far ahead of 250 celebrationPennsylvania Sen. Doug Mastriano called Gettysburg 'one of the most powerful symbols' in the story of America.
Read more »
Investors Turn Bearish Amid Iran War and Private Credit TurmoilSource of breaking news and analysis, insightful commentary and original reporting, curated and written specifically for the new generation of independent and conservative thinkers.
Read more »