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Bank of America Survey: Investor Cash Levels Hit Record Low, Betting on Stocks

  //stocks-investing.news-articles.net/content/202 .. ash-levels-hit-record-low-betting-on-stocks.html
  Published in Stocks and Investing on Tuesday, December 16th 2025 at 12:53 GMT by CNBC
      Locale: New York, UNITED STATES

Investors Are All‑In on Stocks, Bank of America Survey Shows Record‑Low Cash Level

A recent Bank of America (BofA) survey—released on December 16, 2025—has revealed a striking shift in how institutional and retail investors are positioning their portfolios. According to the data, cash balances have plunged to a historic low, underscoring a growing conviction that equities will deliver the next phase of upside. The survey’s findings dovetail with broader market trends that have seen the S&P 500 climb to fresh all‑time highs, while Treasury yields have hovered near historic lows.

1. The Survey at a Glance

BofA’s survey, which was conducted over the previous six weeks, sampled more than 7 000 investors, encompassing a range of asset classes from mutual funds and hedge funds to family offices and high‑net‑worth households. The key takeaway: average cash holdings fell to just $10.3 billion—the lowest level since the survey’s inception in 2010. In relative terms, cash represented only 2.1 % of the portfolio value on average, down from 4.8 % in the prior quarter.

The decline in cash is even more pronounced among the largest participants. For instance, large mutual funds saw their cash balances drop by $4.5 billion, while hedge funds reported a $2.1 billion reduction. The data also showed that retail investors, represented in the survey by brokerage accounts, trimmed cash by $1.8 billion as they moved into equities and exchange‑traded funds (ETFs).

BofA’s research team, led by senior analyst Daniel Ramirez, attributes the cash drawdown largely to the ongoing optimism surrounding corporate earnings. “The earnings season has been a strong driver of investor confidence,” Ramirez said. “We’re seeing companies exceeding expectations in key sectors like technology and renewable energy, and that’s encouraging investors to commit capital to the market.”

2. What the Cash Drop Means for Market Sentiment

Cash balances are often viewed as a barometer of investor sentiment. When institutional investors keep large reserves, it can signal caution or a wait‑and‑see approach. Conversely, when cash shrinks, it generally indicates a willingness to take on risk and a belief that equities will outperform.

The record low cash level reported by BofA suggests that both seasoned and newer investors are betting on continued upward momentum. The survey also highlighted a 14 % increase in equity holdings across the board, while fixed‑income positions fell by 7 %. This shift dovetails with the broader macro narrative: low interest rates (the 10‑year Treasury yield is now at 1.8 %) and an accommodative monetary policy stance from the Federal Reserve.

3. Sector‑Specific Highlights

While the survey aggregated the data across all equities, BofA also broke down the shifts by sector:

Technology firms—particularly those focused on artificial intelligence and cloud infrastructure—were the main beneficiaries of the cash outflow. “Tech is still the engine of growth for most investors,” Ramirez noted. “Even though valuations have risen, the projected revenue trajectories justify the premium.”

The survey also pointed out a modest uptick in environmental, social, and governance (ESG) funds, which rose by $700 million in cash outflow. ESG investors, according to the data, are increasingly seeking higher‑growth opportunities within the tech and renewable energy sub‑sectors.

4. Comparison with Prior Surveys

BofA’s earlier survey, published in March 2025, reported cash levels at $12.6 billion, and the April survey had it at $11.4 billion. The downward trend is not only steep but also sustained. The article referenced an earlier CNBC piece that highlighted a “steady decline in cash since the end of 2024,” noting that institutional cash reserves fell from $16.2 billion to $10.3 billion over 12 months.

The consistency of this trend across different time frames strengthens the argument that the market has reached a new equilibrium: investors are less inclined to sit on idle cash and more eager to capture upside in equities.

5. Potential Risks and Market Implications

While the data is undeniably bullish, it’s not without its caveats. The article discussed a few risk factors that could reverse the current trajectory:

1. Valuation Concerns: The price‑to‑earnings (P/E) ratio of the S&P 500 is now hovering around 27, near the high end of its long‑term range.
2. Interest Rate Volatility: Any surprise hike from the Fed could increase discount rates, compressing future earnings valuations.
3. Geopolitical Tensions: The ongoing trade frictions between the U.S. and China, coupled with escalating tensions in the Middle East, could dampen corporate earnings.
4. Corporate Debt Levels: The average corporate debt-to-equity ratio in the U.S. has climbed to 1.7, raising concerns about future refinancing risks.

Ramirez acknowledges these risks: “We’re not ignoring the headwinds. The challenge is to balance the optimism with disciplined risk management.”

6. Investor Takeaways

For individual investors, the survey’s results provide both reassurance and a warning. The key takeaways include:

• Diversification Remains Key: Even though equity exposure is growing, maintaining a diversified portfolio—especially in a volatile macro environment—helps mitigate downside.
• Stay Focused on Fundamentals: Companies with robust earnings growth, solid balance sheets, and clear paths to profitability are likely to weather short‑term shocks.
• Monitor Cash Levels: A sustained dip in cash could signal over‑confidence; investors should watch for any rebound that might indicate a shift in sentiment.

The article concludes with a quote from BofA’s chief investment officer, Lisa Chang, who emphasized the importance of staying tuned to market fundamentals: “We see the data as a positive indicator of confidence, but we urge investors to remain vigilant. The market has a lot of upside potential, but that potential comes with inherent risks.”

7. Further Reading

For readers interested in a deeper dive, the article links to several additional resources:

• BofA’s Full Survey Report – The downloadable PDF detailing methodology and breakdowns.
• CNBC’s “Equity Volumes Reach Record High” – An earlier report covering the rise in trading volumes.
• “How Cash Levels Affect Market Timing” – A CNBC piece that explores historical correlations between cash reserves and market performance.

These links provide a comprehensive view of how institutional cash balances interact with broader market dynamics, giving investors a fuller picture of where the money is going—and why.

Bottom Line

The Bank of America survey paints a clear picture: investors are largely “all‑in” on stocks, with record‑low cash balances signifying a bullish outlook for the equity market. While the data offers optimism, it also serves as a reminder that markets can be fickle, and prudent risk management remains essential. Whether the momentum will continue, or whether a correction will come, remains to be seen—but the current trend undeniably signals confidence that investors are ready to stake their capital on the next wave of corporate growth.