LONDON, May 19 (Reuters) - Global fund managers raised their allocation to equities by the most on record in May, driven by optimism over earnings growth and by the possibility of the Federal Reserve cutting rates, according to a Bank of America monthly survey published on Tuesday.
Stock markets are trading close to record highs, after a robust earnings season and ongoing optimism about huge spending by companies on artificial intelligence.
That's in defiance of oil prices above $100 a barrel and peace negotiations between the U.S. and Iran at a stalemate, which has knocked global bonds.
The Bank of America survey, which polled 200 respondents with a combined $517 billion in assets under management, was conducted between May 8 and May 14.
A net 50% of fund managers surveyed said they were overweight equities compared to 13% the previous month. Average cash levels are 3.9%, down from 4.3%.
Just 4% said they saw a "hard landing", where economic growth and job creation suddenly contract, compared with 39%, who said they saw "no landing" at all.
66% of respondents said they expected the Strait of Hormuz bottleneck to end in the next few months.
40% of respondents said a second wave of inflation was the biggest tail risk right now.
62% of respondents said they targeted a rate of 6% on 30-year Treasury yields , which are currently around 5.14%. 20% said they targeted a rate of 4%.
Reporting by Amanda Cooper; Editing by Alun John
