Global fund managers lift equity allocations by most on record in May - BofA

(Sharecast News) - Global fund managers lifted their equities allocation in May by the most on record, according to the latest fund manager survey from Bank of America.

Allocation to equities rose from a net 13% 'overweight' in April to 50% in May - the highest allocation since January 2022.

Bank of America said the shift in equity allocation was driven by surge in earnings per share optimism and forecast of Federal Reserve rate cuts. Meanwhile, the cash level declined to 3.9% in May from 4.3% the month before, marking the biggest monthly drop since February 2024. A FMS cash level at or below 4% triggers a 'sell signal'.

Bank of America noted that the median four-week loss from global stocks after 24 sell signals since 2011 is 1%. Investment strategist Michael Hartnett said the bull capitulation was almost complete and early June is "ripe for profit-taking", with bond yields to determine the degree of the pullback.

The survey also showed that pessimism about global growth eased, with just 4% of respondents predicting a 'hard landing' and a record jump in those expecting double-digit earnings per share growth.

BofA said Iran concerns were "subdued", with 66% of respondents expecting the Hormuz bottleneck to end in the next few months.

Bank of America surveyed 200 panellists with $517bn assets under management between 8 and 14 May.