Bank of America strategists are advising global investors to reduce aggressive purchases of US equities, citing elevated positioning and a lack of viable defensive alternatives in current market conditions.
The bank’s latest survey of fund managers reveals that asset allocators are at extreme levels of bullishness, prompting a cautionary note from the lender’s research team.
The warning comes as traditional safe havens offer limited protection, leaving portfolios exposed to potential volatility.
Bank of America analysts argue that the scarcity of defensive positions means investors have fewer buffers if market sentiment shifts.
This aligns with the bank’s earlier identification of a significant reallocation of capital within global financial markets, which they interpret as a precursor to softer investor sentiment during the summer months.
The advice underscores a broader theme of market fragility despite recent gains.
With the Federal Reserve’s next rate decision scheduled for July 29, investors are navigating a period of heightened uncertainty.