Bank of America survey reveals bond yield fears overtake AI worries for fund managers

For months, the AI trade was the thing keeping fund managers up at night. Now they’ve found something scarier: the bond market. Bank of America’s September 2026 Global Fund Manager Survey shows a notable rotation in what professional investors consider the biggest threat to their portfolios. A disorderly rise in bond yields has climbed to the top of the worry list, with 33% of respondents flagging it as the primary tail risk, up from 27% in August. AI bubble fears, meanwhile, have quietly deflated. Only 28% of managers now rank it as their top concern, down from 32% the previous month. The numbers behind the nervousness The survey, which polled between 170 and 190 fund managers overseeing roughly $470 billion to $512 billion in assets, paints a picture of institutional investors slowly pulling back from their most aggressive positions. Equity overweight positions dropped to a net 49%, down from 56%. Cash allocations ticked up slightly to 3.9%. Fund managers have pushed their net bond underweight to -48%, the most extreme reading since May 2022. That’s a paradox worth unpacking: managers say rising yields are their biggest fear, yet they remain deeply underweight the very asset clas...