Bank of America Corp. clients with US$614 billion combined are in the throes of an unprecedented frenzy of risk-taking, as more Wall Street banks sound the alarm on greed across markets.

After a week which recorded the strongest-ever inflow into stocks, a record net 25 per cent of investors surveyed by the investment bank this month are taking higher-than-normal risks. Cash levels slumped to the lowest since 2013, while optimism on cyclical risk assets rose to the highest since 2011.

All this is being fueled by unprecedented optimism on the growth outlook, with 84 per cent of fund managers expecting global corporate profits to improve over the next 12 months. For the first time in a year, investors say companies should focus on spending rather than improving their balance sheets.

As a JPMorgan Chase & Co. gauge of cross-asset complacency, including valuations, positioning and price momentum, hits the highest in two decades, BofA clients aren’t concerned about market exuberance. Just 13 per cent say that U.S. stocks are in a bubble, while 53 per cent see a late-stage bull market.

With a bond “tantrum” dubbed the second tail risk after the vaccine rollout, bond allocations dropped 3 percentage points to a 62 per cent underweight -- the lowest since March 2018.

Nearly a year after the COVID-19 crisis fueled an unprecedented rout in global markets, stimulus measures and vaccination efforts are pushing investors into reflation trades of all stripes. But after a record flood of money into equity funds, BofA strategists have warned that such exuberance may precede a correction.

Other highlights of the Feb. 5 to 11 survey:

  • Cyclical rotation paused in February, with investors boosting equity exposure to tech, healthcare and consumer staples versus January
  • Exposure to commodities and equities is at decade-highs
  • Long tech stocks retook its top spot as the world’s most-crowded trade, followed by long Bitcoin, short U.S. dollar and long ESG
  • Allocation to U.S. stocks increased 5 percentage points to net 9 per cent overweight
  • Exposure to euro-area stocks dropped 9 points to net 20 per cent overweight
  • Allocation to EM equities dropped 5 points to net 57 per cent overweight, remaining the most-preferred region
  • Exposure to U.K. equities increased 5 points to 10 per cent underweight, remaining the top regional underweight