Bank of America’s February global fund manager survey (FMS) indicates a sharp rise in investor concern that corporates may be spending too heavily on capital projects, even as investor optimism has reached multi-year highs.
The survey, fielded from Feb. 6 to Feb. 12 and including 190 panelists who collectively manage $512 billion in assets, finds that the share of chief investment officers advocating for balance sheet repair has jumped. According to the poll, 35% of CIOs now say companies should "improve balance sheets," up from 26% in the prior survey, while only 20% support increasing capital expenditure - down from 34% previously. BofA frames this pattern as evidence that perceptions of corporate "overinvestment" have climbed to a new record.
That trend toward concern over capex comes amid unusually positive investor sentiment. BofA reports that its composite FMS sentiment gauge rose to 8.2, the most bullish reading since mid-2021. Net 52% of respondents now expect a "no landing" scenario for the global economy - the highest reading on that measure - while 36% forecast a "boom," the strongest share since February 2022.
Investor expectations for the next 12 months also skew positive in other measures. Net 39% of surveyed managers expect a stronger global economy over the coming year, and the survey notes that global expectations turned positive in November 2025. Nevertheless, inflationary concerns remain palpable: 42% of respondents characterize the outlook as "stagflation," indicating that price pressures are still embedded alongside improving growth expectations.
On corporate earnings, net 24% of respondents expect double-digit earnings growth over the next 12 months - the most positive reading since August 2021.
Positioning data in the survey reveal a clear tilt toward risk assets. Net 48% of managers report being overweight equities, the highest overweight position since December 2024, while net 40% are underweight bonds - the largest underweight since September 2022. Expectations for interest rates and yields also diverge across the curve: net 57% expect higher long-term bond yields, the strongest reading since February 2022, while net 46% expect lower short-term rates. BofA highlights that the combined allocation to equities and commodities is net 76% - the highest since January 2022.
Geographic and sector tilts are apparent. Investors are net 49% overweight emerging market equities, the highest such overweight since February 2021, and 35% overweight Eurozone equities; by contrast, they are net 22% underweight U.S. equities. February’s flows show rotation into cyclical and defensive real-economy sectors - specifically Energy, Materials and Staples - while tilting away from U.S. equities, Technology and the U.S. dollar.
Despite the bullish positioning, risk warnings are building in investors’ minds. BofA’s Bull & Bear Indicator climbed to 9.5, which the firm describes as triggering a contrarian "sell signal." When asked about tail risks, respondents pointed most frequently to an "AI bubble," cited by 25% as the biggest tail risk. In addition, 43% of fund managers view private equity and private credit as the most likely origin of a systemic credit event.
Market positioning shows crowded trades as well. "Long gold" remains the most crowded trade for a second consecutive month, mentioned by 50% of respondents.
Surveyed investors also expressed views on policy and politics. Regarding U.S. monetary policy, 38% said a Kevin Warsh nomination as Federal Reserve chair would be most likely to cause higher U.S. Treasury yields and a weaker U.S. dollar. On electoral outcomes, 62% of respondents identified a Democratic House and a Republican Senate as the most likely scenario for the 2026 U.S. midterms.
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Collectively, the FMS data depict a market environment where investors are simultaneously highly constructive on growth prospects and yet increasingly worried about corporate capital allocation and concentrated risks across tech, credit and crowded trades. That combination helps explain the rotation into cyclicals and commodities even as caution about overinvestment and potential systemic threats grows.