(Bloomberg) -- Optimistic about a return to economic growth, fund managers have been slashing their cash positions and embracing risk assets to an extent that’s raising red flags for strategists at Bank of America Corp.

Money managers overseeing $534 billion in total are underweight cash for the first time since May 2013, with levels down to 4%, according to a BofA survey that took place Dec. 4 through Dec. 10. Investors are the most bullish on stocks and commodities -- the so-called “risk-on” assets -- since February 2011, while the Bitcoin rose in the list of the most crowded trades, according to BofA. The plunge in cash exposure is setting off the broker’s sell signal for equities.

“Investor sentiment is bullish as vaccine hopes induce strong ‘buy the reopening’ trade,” said BofA strategists led by Michael Hartnett in a note. “We say sell the vaccine in the first quarter 2021.”

BofA is weighing in on the dilemma that many market players face at the end of the year: whether to reap the returns in stocks and turn defensive now, or continue buying on bets that the rally can extend into 2021.

The surveyed investors were also the most optimistic on equities since January 2018, while hedge funds’ exposure to stocks remains elevated at 43%, according to BofA.

The drop in cash levels and upbeat outlook on growth signal an early-stage economic recovery similar to those seen after the 2008 financial crisis and the dot-com bubble, BofA said.

“Recovery expectations have also surpassed prior recessions in both speed and magnitude,” the strategists said.

When exiting cash, money managers pounced on value, emerging-market, U.K., banking and consumer discretionary stocks, while reducing exposure to U.S. and health-care equities as well as bonds. Among surveyed investors, 42% expect the Covid-19 vaccine to start boosting economic growth in the second quarter of 2021, while a record 76% forecast a steeper yield curve.

But although 31% of surveyed money managers believe cheaper value stocks can outperform growth stocks -- the second-highest number since 2014 -- a long in technology shares remains the most-crowded trade, followed by a short in the U.S. dollar and a long in the Bitcoin.

Other survey highlights include:

  • BofA strategists say “reopening rotation zeal” is best expressed through record net 31% of investors betting small-caps will outperform large-caps
  • Net 85% of surveyed fund managers expect global profits to improve over next 12 months, best outlook since 2002
  • Allocation to U.S. stocks fell 8 percentage points to net 15% overweight, while allocation to euro-area stocks increased 7 percentage points to net 25% overweight
  • Allocation to emerging-market stocks increased 19 percentage points to 55% overweight, highest since 2010, the survey’s most-preferred region
  • Exposure to U.K. equities rose 16 percentage points to 18% underweight, largest monthly increase since 2015; the region remains the biggest underweight globally

©2020 Bloomberg L.P.