u/FINQ-Research

The latest Bank of America Global Fund Manager Survey is out, providing a fresh look at how institutional investors are positioned and how expectations around growth, earnings and monetary policy are evolving.

The August survey points to an increasingly bullish backdrop.

Investor sentiment has climbed to its third-highest level since 2022, while cash allocations have fallen to just 3.5% of AUM. Global equity exposure has simultaneously risen to its highest level since November 2021.

Macro expectations are equally constructive. A record 56% of fund managers now expect a “no landing” scenario, while expectations for double-digit EPS growth have reached their highest level since 2021.

Positioning reflects this optimism. Investors remain overweight equities—particularly US and emerging-market stocks—while bonds remain underweight. Technology, banks and energy are among the preferred sectors.

However, the survey also highlights increasingly crowded positioning. Long global semiconductors remains the most crowded trade, while an AI bubble is now considered the biggest market tail risk among surveyed fund managers.

Below, I’ve compiled the most important charts from the August survey, covering investor sentiment, macro expectations, asset allocation, sector positioning and the risks currently dominating institutional portfolios.

If you find these monthly institutional research updates useful, consider subscribing. I’ll continue sharing the key charts and data from the Bank of America Global Fund Manager Survey each month, alongside other relevant market research.

Source: Bank of America Global Fund Manager Survey, August 2026

All Charts: https://www.instagram.com/finq.research

A few data points I’ve been tracking:

• Valuations are below historical averages
• Only 9.7% of utility stocks are trading above their 100-day EMA
• American Water Works (AWK) short interest has climbed to ~12.1M shares, the highest level in years

None of these are buy signals on their own.

But taken together, they point to increasingly bearish sentiment and positioning across a sector that is already historically cheap.

The question I’m asking: Are utilities fundamentally deteriorating, or is too much pessimism already priced in?

Curious how others are looking at the sector right now.

Yesterday, I pointed out that utility sector valuations have fallen below their 5-year average forward P/E.

Now the technical picture is telling a similar story: only 9.7% of utility stocks are trading above their 100-day EMA, signaling extremely weak market breadth across the sector.

When valuations are below average and participation drops to such low levels, it often indicates that sentiment has become overwhelmingly negative.

Of course, cheap can always get cheaper. But from a risk/reward perspective, utilities are starting to stand out as one of the more out-of-favor sectors in the market right now.

Are utilities a value trap, or is the market becoming too pessimistic? Curious to hear your thoughts.

Utilities could become an interesting contrarian opportunity again.

The Utilities sector’s Forward P/E is currently trading below its 5-year average. At a time when other areas of the equity market are attracting significantly more attention, we believe the sector may be worth a closer look.

In our view, Utilities could be particularly interesting from a contrarian perspective, while also fitting well as a defensive component within a broadly diversified portfolio. Relatively stable business models and less cyclical demand can provide an attractive counterbalance to more growth-oriented and cyclical exposures.

Of course, a more attractive sector valuation does not mean that every stock within the sector is cheap. Careful stock selection remains essential.

Nevertheless, we believe it can be especially worthwhile to take a closer look when a sector is not in the spotlight. These are often the periods when interesting contrarian opportunities can emerge.

What are your thoughts on the Utilities sector? Could it be an attractive defensive addition to a diversified portfolio?

This is not investment advice. #stocks

The BofA Bull & Bear Indicator is back at 9.7/10, deep in “Extreme Bull” territory.

This isn’t automatically a sell signal. Markets can stay euphoric for longer than expected.

But when positioning and sentiment are already this bullish, the question becomes: How much upside is already priced in – and who’s left to buy?

Would you see this as a warning sign or simply confirmation of a strong bull market?

One volatility signal that caught my attention recently:

The gap between implied volatility and realized volatility across S&P 500 constituents has widened significantly.

Looking at the data, realized volatility has recently climbed above 50%, while the weighted 30-day implied volatility of the index constituents remains closer to the mid-30% range.

As a consequence, the IV Premium has moved into negative territory.

What's interesting isn't necessarily the absolute level of volatility, but the fact that actual market movements have been much larger than what options markets were pricing in.

To me, this suggests that recent uncertainty and market swings have developed faster than options markets anticipated. That's not a directional signal for equities, but it does raise an interesting question:

Does this divergence close through lower realized volatility going forward, or does implied volatility eventually reprice higher to reflect the current environment?

Curious how others are interpreting the current IV vs. realized vol setup and whether it changes how you think about option pricing or positioning. #stocks #volatility #sp500

The chart below shows weighted 30-day implied volatility (IV) versus realized volatility across S&P 500 constituents.

What's interesting is that realized volatility has recently moved above implied volatility. In other words, the market has been more volatile than what option prices were implying.

This can be interpreted in two ways:

• The options market expects volatility to cool down from current levels.
• Options may be relatively cheap right now, since the volatility being priced in is lower than the volatility that has actually occurred.

Historically, implied volatility tends to trade above realized volatility because option sellers demand a risk premium. Seeing realized volatility exceed IV is therefore an interesting deviation and suggests the market is not pricing in a major volatility shock from here.

What do you think: complacency from the options market or a justified expectation of lower volatility ahead?

Many investors are underestimating a crucial factor: corporate profitability.

This is where one of the biggest differences could lie.

While many investors argue that the market is too expensive based on its current forward P/E, corporate net margins remain near historically high levels — and this is not exclusively driven by mega-cap technology companies, but can also be observed across the broader S&P 500.

This is often overlooked.

Of course, there is an important distinction: the chart shows currently realized net margins, while the forward P/E is based on expected future earnings. Nevertheless, margins provide an important indication of how efficiently companies are operating today — and how much potential they have to expand future earnings.

A valuation multiple should always be viewed in the context of future earnings growth and profitability. If companies can maintain these elevated margins, earnings can grow faster than many investors currently expect.

If revenues remain stable or continue to grow, expanding margins can further support earnings growth and allow profits to increase significantly faster than many currently anticipate. This could allow today’s valuation multiple to normalize faster than the forward P/E alone might suggest.

The key question, therefore, is not only whether the forward P/E is high.

The bigger question is whether companies can sustainably maintain their currently exceptional net margins — and whether revenue growth and further efficiency gains can drive additional earnings expansion.

Because if that happens, today’s forward P/E could normalize as earnings catch up faster than many investors currently expect.

A look at the latest data offers an interesting counterargument.

The 10 largest companies in the S&P 500 now account for approximately 39% of the index's total market capitalization. At the same time, these companies are also expected to generate 38% of the S&P 500's forward earnings over the next 12 months.

That distinction matters. The growing concentration within the index is not solely the result of expanding valuations or investor enthusiasm. It is also supported by the exceptional earnings power of these businesses.

This does not mean every mega-cap stock is attractively valued. However, it does suggest that today's market leadership is backed by fundamentals to a significant degree.

📈 The dominance of the largest companies is driven not only by size, but also by their share of expected profits.

The oil price is once again well on its way toward new all-time highs (for anyone who forgot: that’s also one of the reasons we had the -10% correction from January to end of March – largely driven by rising oil prices). On top of that, the S&P 500 just casually delivered a “nothing to see here” rally of almost 14% in 20 trading days.

At the same time, the Dispersion Index keeps rising, which basically means: the index is increasingly being driven by a few heavyweights rather than broad market participation – how convenient that the largest position in the index, Nvidia, is currently trading at its lowest put/call ratio in over a year (0.37), while also attracting massive call volumes from retail investors. (Who, of course, are always right.)

Meanwhile, the Left Tail Index is back at January levels, meaning downside protection against a decent correction is currently “cheap.” But who needs hedges when everything keeps going up.

The Constituent Volatility Index – i.e. the average volatility of individual S&P 500 stocks – is also trending higher. Fair enough, earnings season, nothing unusual. But what’s interesting is that at the same time volatility on volatility is falling, with the VVIX declining. So while single-stock volatility (VIX-equity) is rising – and the index itself is literally built from those same stocks – the “volatility of volatility” is dropping. Which, of course, makes perfect sense.

In the previous chart, you can also see the strong correlation between new 52-week lows (red) and the VIX (turquoise). And purely coincidentally, we’re again at a level in the lows that has historically often preceded rising volatility – usually accompanied by corrections in the index.

Just like the fact that the VIX typically sees very low call and put volume exactly when nobody expects volatility to rise. And once it finally does, people slowly start to think that maybe hedging wasn’t such a bad idea after all. :D

Der Ölpreis ist wieder auf bestem Weg Richtung Allzeithoch (für alle, die es vergessen haben: Genau deswegen hatten wir die -10 % Korrektur von Januar bis Ende März – wegen des steigenden Ölpreises). Dazu legt der S&P 500 mal eben eine kleine „Nebenbei“-Rally von knapp 14 % in 20 Handelstagen hin.

Gleichzeitig steigt der Dispersion Index weiter, was so viel heißt wie: Der Index wird eher von ein paar Schwergewichten gezogen als von der breiten Masse – ach wie gut, dass die größte Position im Index Nvidia gerade mit dem niedrigsten Put/Call Ratio seit über einem Jahr (0,37) handelt und dazu massive Call-Volumina von Privatanlegern bekommt. (Die natürlich immer richtig liegen.)

Parallel dazu liegt der Left Tail Index wieder auf Januar-Niveau, sprich: Absicherungen gegen einen ordentlichen Rücksetzer sind gerade „günstig“. Aber wer braucht schon Hedges, wenn alles steigt.

Der Constituent Volatility Index – also die durchschnittliche Volatilität der einzelnen S&P-500-Aktien – zieht ebenfalls an. Klar, Berichtssaison, nichts Ungewöhnliches. Aber dass gleichzeitig die Volatilität auf die Volatilität fällt, also der VVIX nachgibt, ist schon spannend. Schließlich steigen die Schwankungen in den einzelnen Aktien (VIXEQ) – und der Index (S&P 500) wird ja genau aus diesen Aktien berechnet, in denen die höhere Schwankung steckt. Aber dass die „Volatilität auf die Volatilität“ dabei einfach sinkt… macht natürlich Sinn.

Im vorletzten Chart sieht man dann noch die starke Korrelation zwischen neuen 52-Wochen-Tiefs (rot) und dem VIX (türkis). Und rein zufällig sind wir bei den Lows gerade auf einem Niveau, von dem aus es in der Vergangenheit öfter zu Anstiegen kam – inklusive steigender Volatilität (was ja meistens mit Korrekturen im Index einhergeht).

Genauso wie die Tatsache, dass beim VIX immer genau dann kaum Volumen in Calls oder Puts vorhanden ist, wenn absolut niemand mit einem Anstieg rechnet. Und sobald er dann doch hochzieht, kommt man ganz langsam auf die Idee, dass ein Hedge vielleicht gar nicht so dumm gewesen wäre. :D #keineAnlageberatung #keineahnungwasichhierschreibe!