Fund Managers' Current Asset Allocation - January

There was a notable increase in bullish fund manager behavior over the past month. The highlights from the January BAML fund manager survey are as follows:

1. Cash balances have dipped to a very low 3.8% (4.1% in December 2012), lowest since February 2011. The typical range is 3.5-5%.
2. Equity allocations: a net 51% of fund managers are overweight equities (highest since February 2011). Just 35% overweight in December
3. Overweight Eurozone equities by 15% (vs 7% December), the highest in 5 yrs. Other markets: 
1. EEM overweight by 40% (vs 38% in December)
2. Overweight Japan 3% (vs underweight 20% in December and underweight 34% in November 2012). 
3. Underweight US by 3% (vs overweight 5% in December).   
4. Overweight global financials for first time since February 2007 ($XLF) 
5. Sector weighting in telecoms (underweight by 25%) lowest level since December 2005; largest fall is pharmaceuticals (overweight by11%, down 24% from December 2012).
6. Allocations to bonds fell to its lowest level since May 2011, net 53% underweight. 
7. 49% expect government bonds to be sold to fund purchases of higher beta equities ($TLT)
8. "Risk appetite among fund managers has hit its highest level in nine years and is hovering near all-time highs" says BAML.
9. 59% expect global economy to strengthen next 12 months, the highest optimism since April 2010

If fund managers are the most bullish since January 2004, then note that year was a sideways chopfest. Low in August before rocketing in October thru year end.