Bank of America Fund Manager Survey: Going long on large-cap tech stocks is currently the most crowded trade, with almost no one willing to miss out.

According to the latest global fund manager survey by Bank of America, almost no one wants to miss the rapid rebound of US technology stocks, and there is a broad consensus on this point. The survey shows that investors are focusing on long positions in technology stocks in the AI-led boom. 55% of respondents said that long positions in large technology stocks are currently the most crowded trades, the highest proportion since 2020.

However, Michael Hartnett, the "most accurate analyst on Wall Street" and a strategist at Bank of America, pointed out that fund managers are still generally underweight in stocks because the current sentiment is still "persistently depressed". Market sentiment can be measured from the level of cash holdings, economic growth expectations, and asset allocation. Investors have reduced their allocation of stocks to a five-month low.

In this survey, other investors believe that the most crowded trades are: long positions in the Japanese stock market, short positions in the US dollar, long positions in US bonds, and short positions in US bank stocks.

However, people generally hold a cautious attitude towards the monetary policy of the Federal Reserve. 59% of participants believe that the Fed has not yet completed the entire rate hike cycle, which is very different from last month's survey, when 61% of respondents believed that the Fed had completed the last rate hike.

Looking at the latest CPI data released by the United States on Tuesday, US inflation further slowed down in May, supporting Fed officials' decision to pause rate hikes this week. "The new Fed communication agency wrote that the Fed is expected to not raise interest rates this week, but due to concerns about inflation, officials may raise their rate forecasts and send a signal to hike rates again.

Respondents are generally optimistic about the impact of artificial intelligence in the next two years, with 40% of people expecting it to boost corporate profits. In this AI survey, another 2% of people believe it will promote employment, 14% believe it will promote both employment and corporate profits, and 29% believe it will not promote either employment or corporate profits.

In this survey, people are becoming less pessimistic about profit expectations. Investors now expect earnings per share growth in the global stock market for the next 18 months to be -0.6%.

In terms of asset allocation, investors' average cash holdings fell from 5.6% in May to 5.1% in June, and they continue to be overweight in bonds.

Looking at stock style types, a net 19% of people expect value stocks to outperform growth stocks, and a net 37% of people believe that large-cap stocks will outperform small-cap stocks.

Bank of America's survey was conducted from June 2nd to 8th, surveying 247 fund managers who collectively manage $708 billion in assets.

On Tuesday, the S&P 500 hit a more than one-year high, and small-cap stocks rose more than 1% to a three-month high. Tesla has risen for 13 consecutive days, setting a new record for the longest consecutive rise since its listing. Nvidia closed at a new high and its market value returned to one trillion US dollars. Yields on European and American bonds soared by double digits.