Fund Managers Experience ‘Bull Crash’ as Optimism Takes a Nosedive
- Market News
February 17, 2026 5:22 pm
One month, fund managers are riding high on optimism, and the next, they’re running for cover. According to Bank of America’s latest fund manager survey, global investors have just experienced what’s being dubbed the “second-largest drop in growth expectations on record.” That’s right—the people managing billions in investments have gone from wildly bullish to downright cautious in just a matter of weeks.
But what’s driving this sudden change in sentiment? Concerns over slowing global growth, rising interest rates, and persistent inflation have investors questioning whether the stock market can sustain its rally. And when fund managers start hoarding cash instead of buying stocks, you know the mood is shifting.
The latest data shows that fund managers have slashed their equity allocations at the fastest pace since the COVID-19 crash in March 2020. At the same time, cash holdings have jumped from 3.5% to 4.1%, signaling a move towards safety. Meanwhile, the U.S. stock market, which had been leading the global rally, saw the biggest allocation drop in nearly two years.
Emerging markets and European equities aren’t faring much better. The survey indicates that investors have significantly reduced exposure to China, fearing that the country’s post-pandemic recovery is losing steam. Meanwhile, concerns over a potential European recession have led to a pullback from EU stocks.
For everyday investors, this shift in sentiment could signal increased volatility ahead. When big institutional investors start getting nervous, the rest of the market usually follows. This means that we could see more choppy trading sessions, larger swings in stock prices, and increased uncertainty in the coming months.
The question now is whether this is a temporary market overreaction or a sign of deeper economic trouble ahead. Some analysts believe this could be a buying opportunity, as panicked fund managers tend to overreact to short-term fears. Others warn that this could be the start of a prolonged period of market weakness, with interest rates and inflation remaining key risks.
