Fund managers optimistic—but remain cautious—as trade-war jitters ease
Investor sentiment is finally turning a corner.
According to Bank of America’s latest Global Fund Manager Survey (June 6–12), optimism is back on the table, with the sentiment index hitting +3.3—a level not seen since before Trump’s “Liberation Day” tariffs. While the mood has clearly improved, pros aren’t diving in headfirst. There’s optimism, yes—but with eyes wide open.
“Investors are the most optimistic since March,” said Michael Hartnett, Chief Investment Strategist at BofA. “But they’re still defensive—cash levels remain high by historical standards.” (Source: Yahoo Finance)
What’s behind the bounce?
Fund managers are quietly shifting gears:
- Less cash, more risk: Cash levels hit a 3-month low—always a tell-tale sign that money is moving back into the markets.
- Europe > U.S.: Eurozone stocks are now more popular than U.S. ones, driven by Germany’s fiscal stimulus hints.
- Soft landing hype: 66% now expect a soft landing, up from 61%. Only 36% still see a recession coming.
- Strong balance sheets: For the first time since 2015, most fund managers say corporate balance sheets look underleveraged. Thank Q1 earnings for that.
- Dollar doubts: The U.S. dollar is now the most underweighted asset since 2005. The DXY is down nearly 9% YTD—investors are clearly hedging away.
“Fund managers are increasingly bearish on the U.S. dollar,” reported MarketWatch, citing BofA’s survey. “It’s the most underweight position in two decades.” (Source: MarketWatch)
Where’s the money going?
The buzz is clear: the “Sell America” rotation is here.
- Europe’s back in play.
- Emerging markets are getting love again—especially commodity-exposed economies.
- Banks and energy are hot picks—classic plays when rates rise or growth surprises.
- Contrarian trades like long gold or long USD? Still popular, even if everyone’s inching back into risk-on mode.
“Most investors now believe international stocks will outperform U.S. equities over the next five years,” noted Business Insider, referencing BofA’s findings. (Source: Business Insider)
Still spooked? You’re not alone.
Even with the glow-up in sentiment, fear hasn’t vanished:
- Stagflation fear is top of mind for 75% of surveyed managers.
- Global slowdown? Sure, down from 82% to 46%, but that’s still nearly half expecting trouble.
- Middle East tensions popped up after the survey closed—so that risk isn’t fully priced in yet.
So, what now? Here’s what the smart money is watching:
| Focus Area | What to Do |
|---|---|
| Positioning | Lean into Europe, EM, banks, energy. They’re trending. |
| Risk strategy | Diversify currency exposure. Dollar ain’t what it used to be. |
| Hedging | Gold and cash still have a role. |
| Catalysts | Watch China talks, Fed moves, Middle East heat, and Q2 earnings. |
About the survey
This isn’t personal speculation—it’s BofA’s institutional pulse check.
Survey period: June 6–12, 2025.
Respondents: 190–222 fund managers.
AUM: Over $520B in combined assets.
Conclusion
Investor mood is warming up—but no one’s throwing caution to the wind. We’re seeing early signs of risk appetite returning, with international and cyclical sectors back in fashion. That said, sentiment is still grounded. Don’t call it a bull market just yet. But yeah, it’s not doomsday either.
Marc has been involved in the Stock Market Media Industry for the last +5 years. After obtaining a college degree in engineering in France, he moved to Canada, where he created Money,eh?, a personal finance website.
