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Institutional investors are buying more stocks than ever and yet they have turned more bullish on gold than the Magnificent 7, according to Bank of America’s October fund manager survey.
Forty-three percent of respondents ranked “long gold” as the most crowded trade this month, ahead of the 39 percent for “long Magnificent 7.”
That’s flipped since September, when 42 percent of respondents said “long Magnificent 7” was the most crowded trade and just 25 percent said the same for “long gold.”
For context, over the last four weeks:
- Gold: +14.3 percent
- Magnificent 7: -0.50 percent
No wonder the latest round of fund manager respondents — who together oversee $468 billion in assets — have changed tune on the most crowded trade.
The performance and survey sentiment aligns with JPMorgan’s recent report on the so-called debasement trade, which details investors’ broad rotation into hard assets like gold or bitcoin.
It also tracks with the recent uptick in chatter around an AI bubble.
In fact, according to BofA’s survey, the biggest tail risk for investors is an “AI equity bubble,” with one-third of respondents ranking that first.
In September, that wasn’t even seen as a top-three tail risk.
In a separate report published Wednesday, Bank of America also reported that clients bought the dip last week with the S&P 500 falling 2.4 percent after being net-sellers for the prior four weeks.
- Inflows into single stocks hit $4.1 billion, 5th highest since 2008
- Institutional weekly inflows hit highest level since November 2022
- Hedge funds continued to sell equities for a 5th week in a row
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Phil Rosen
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