Despite a massive rally on Wall Street this year, professional investors remain skeptical of what the future is for stocks and other risk assets, according to the latest Bank of America Global Fund Manager Survey. The July version of the closely watched sentiment gauge shows that even with the S & P 500 up nearly 18% year to date , managers actually raised their cash allocation to 5.3% of portfolios, an increase of 0.2 percentage point from a month ago. Respondents still worry about the “tail risks” of elevated inflation leading to policy miscues from central banks such as the U.S. Federal Reserve. In all, sentiment across cash positions, stock allocations and the outlook for the economy is still “stubbornly low” among portfolio managers, said BofA chief investment strategist Michael Hartnett, who compiled the report. The 36.1% rally in the Nasdaq Composite had 59% of respondents saying that Big Tech is the most crowded trade, followed by Japanese equities. That fear has led a net 39% of survey respondents to say they are taking less risk than normal, a 2 percentage point increase from June. For stocks, allocations are at a seven-month high but still are underweight relative to benchmarks. Interestingly, Hartnett noted that 66% retail investors as gauged by the American Association of Individual Investors surveys are in stocks, the “most bullish since late 2021.” Hartnett also noted a “capitulation” move out of commodities, as managers have taken their most underweight position in the sector since May 2020. On the economy, some 48% of respondents see a global recession starting in the first half of 2024, though a slim plurality has pushed the start of the contraction into the second quarter. The July survey captured the sentiment of 262 respondents with $652 billion in assets under management. Sentiment surveys often can be contrarian indicators, so rising pessimism can be a good sign for markets.