Global fund managers are turning decisively pro-risk, with equity allocations rising to an eight-month high and cash holdings dropping to just 3.8%, according to Bank of America’s October Global Fund Manager Survey. The poll shows investors are the most bullish on equities since February, buoyed by optimism about a soft economic landing and stronger growth prospects.That optimism, however, comes with some notable shifts in positioning. The survey found “long gold” is now the most crowded trade, cited by 43% of respondents, ahead of the “long Magnificent Seven” tech stocks at 39%, and “short U.S. dollar” at 8%. BofA strategist Michael Hartnett said investors are betting heavily on a second wave of inflation and a weaker dollar, while concerns about Fed independence and U.S. dollar debasement have gained ground.At the same time, bond exposure has fallen to its lowest since late 2022, allocations to commodities and emerging-market equities have surged to multi-year highsliquidity is seen as the best since 202154% of respondents now expect a soft landing, with growth optimism seeing its biggest six-month jump since 2020.Despite the bullish tilt, valuation anxiety is rising. A record 60% of investors say global equities are overvalued, and more than half believe AI-linked assets are in bubble territory. “AI mania” replaced inflation as the top perceived tail risk, followed by a second inflation wave and fears of U.S. dollar debasement. The survey also flagged private credit as the asset class most likely to trigger a systemic event if sentiment sours. ---The survey signals a strong risk-on shift that could extend equity and commodity rallies in the near term, but the dominance of crowded trades like gold and AI suggests markets may be vulnerable to sudden reversals if inflation or policy expectations shift. This article was written by Eamonn Sheridan at investinglive.com.