BofA Survey: Disorderly Bond Move Overtakes AI as Top Tail Risk

A disorderly rise in bond yields ranked as the biggest tail risk in the September 2026 BofA Global Fund Manager Survey, according to Bloomberg.

Cash holdings rose to 3.9% in the September survey, according to Yahoo Finance.

In the August survey, a disorderly rise in bond yields was the second-largest fear, cited by 27% of investors as their largest worry, according to Trustnet.

Equity exposure stayed high through August. Global fund managers held 56% of their portfolios in equities in the survey reported Aug. 20, according to Bloomberg. In July, global investors turned the most bullish since February, according to Bank of America's survey. In that July survey, 45% of respondents cited AI bubble risks as the largest tail risk facing markets, as reported July 14 by Reuters.

The late-2025 surveys were centered on AI valuations and spending. On Nov. 18, 2025, an AI bubble was the biggest tail risk for 45% of respondents in Bank of America's survey, according to Reuters. The same report noted a record share of investors said companies are "overinvesting". In a Bank of America global survey reported Oct. 14, 2025, a record share of global fund managers said artificial intelligence stocks are in a bubble.

The broader context here is a rotation in the stated left tail. For much of the past year the primary fear was concentration in AI equities and the capex behind them. In September the primary fear was the discount rate. That is a different hedging problem. Equity hedges address the first. Cash and duration control address the second.

In my view, the two September data points belong together. Cash at 3.9% alongside a top-ranked bond shock fear points to concern about velocity and correlation. A fast move in yields tightens financial conditions, reprices equity risk premia, and hits long duration in bonds and growth equities simultaneously. It hurts. Liquidity buffers help.

Looking at what this means for positioning, the sequence from July to September is instructive. July combined peak bullishness with AI bubble risk at 45%. August kept equity weight at 56% while bond-shock fear moved to second place at 27%. September moved bond-shock fear to first place while cash edged up. Managers retained equity beta even as confidence in stable yields slipped. That leaves portfolios sensitive to term premium and supply indigestion. The issue is not higher yields alone. It is disorderly repricing.