Fund managers turn most bullish in 3-1/2 years in 'run it hot' environment – BofA survey

MILAN, Dec 16 (Reuters) - Global fund managers are the most bullish in three and a half years this month, Bank of America's survey showed on Tuesday, as optimism over a "run-it-hot" macro backdrop and policy expectations drove allocations to risk assets.

Cash holdings tumbled to a record low of 3.3% from 3.7% in November, as exposure to equities and commodities hit the highest since February 2022, the bank said.

The survey's "Bull & Bear" indicator climbed to 7.9, close to a "sell signal", suggesting that bullish investor positioning remains the biggest headwind for risk assets.

Profit expectations are at their strongest since August 2021, with 57% of respondents predicting a soft landing for the global economy and just 3% bracing for a hard landing, according to BofA.

AI bubbles topped the list of tail risks for the coming year. Private credit and hyperscaler spending were seen as the most likely sources of a credit event, which ranked fourth among tail risks.

203 participants with $569 billion in assets under management responded to the global survey.