Investors are stockpiling cash at the fastest pace since the pandemic

Cash is taking over, according to a recent survey by Bank of America (BofA) – one of the world’s largest multinational banking and financial corporations. The survey shows a trend of fund managers becoming less optimistic and choosing to increase the proportion of cash at the fastest rate since the pandemic broke out in March 2020.

BofA’s investor sentiment index fell to its lowest level in the past 6 months, although still significantly higher than the bottom in April 2025 when US President Donald Trump announced widespread tariffs. This decline in sentiment was accompanied by a notable increase in cash holdings. Survey participants said the proportion of cash increased from 3.4% in February to 4.3% as of last week.

Fund managers have also turned their attention from worries about an “AI bubble” to geopolitical and inflation risks. This reflects the impact of the Middle East conflict and rising oil prices. The report quotes the world’s largest asset manager BlackRock as saying: “There is almost no place to take refuge from this short-term oil supply shock.”

Michiel Plakman, head of global equities at asset manager Robeco, said investors are gradually “accepting the reality” of a protracted war in the Middle East. This could cause significant harm to the market.

Seema Shah, global chief strategy officer at Principal Asset Management, shared that the global economic slowdown could affect the factors that have stabilized financial markets, making investor sentiment more cautious. At the same time, she emphasized that although many investors are separating the story of geopolitical conflict from other issues such as private credit or concerns about the “AI bubble”, in fact, these factors can be closely linked if the macro context changes.

The survey was conducted by Bank of America’s analytics team, led by chief strategist Michael Hartnett. 181 fund managers participated, representing approximately $500 billion in assets.

The shift to pessimism is reflected not only in cash levels and general sentiment indicators, but also in a sharp decline in growth expectations. From 39% of respondents saying the economy will improve in the next 12 months, the latest rate dropped to 7%. Besides, the increase in inflation expectations is also notable data, when 45% forecast that the global consumer price index (CPI) will increase higher next year.

The prediction of rising inflation has significantly affected the forecast of interest rate cuts that was previously expected by the market. 17% of asset managers believe that central banks will lower interest rates, down sharply from 46% in the February survey. Therefore, the scenario that the US Treasury yield curve will continue to rise until 2026, once supported by 80% of asset managers in February, is now only 56%.