BofA Survey: 80% Call Chip Trade Most Crowded, Won't Trim
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- Bank of America's May Global Fund Manager Survey found a record 80% of respondents view semiconductors as the most consensus long position, but fund managers remain reluctant to sell — a stance chief equity strategist Michael Hartnett dubs 'Frozen Bulls'
- The iShares Semiconductor ETF is up 99% for the year, mirroring similar gains at Taiwan Semiconductor, Samsung Electronics, and SK Hynix, after the Philadelphia Semiconductor Index hit another all-time high with a 5% spike
- BofA's Bull & Bear Indicator stands at 8.9 out of 10, firmly in 'sell signal' territory, while cash levels among surveyed managers rose to 4.1% from 3.9%
- Rate-hike expectations surged: 40% of fund managers now expect the Fed to raise rates within 12 months, up from 16% the prior month, and more than half anticipate a 'hawkish hold' from new Fed chief Kevin Warsh at his first meeting
- Of 170 respondents managing nearly $500 billion in aggregate, 34% flagged 'second-wave inflation' from the energy crisis and 28% pointed to an 'AI bubble' as the top tail risks
- Only 1% of respondents think gold is overvalued — a 26-month low — and just 3% are underweight the dollar, the lowest level since President Trump's 'liberation day' tariff announcement
- Hartnett recommends consumer stocks, European equities, bonds, and REITs as contrarian plays, favoring the consumer discretionary ETF, which remains effectively flat for the year
Why it matters: The survey reveals a critical positioning mismatch: 80% call chips the most crowded trade but won't sell, while rate-hike expectations doubled from 16% to 40% in a single month. With BofA's own Bull & Bear indicator at 8.9/10 — a sell signal — managers running nearly $500 billion are positioned against the hawkish Fed they themselves expect.
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