A recent survey of fund managers by Bank of America Merrill Lynch shows that a record number of 78% respondents believe equities are overvalued following their rebound from the March low—the highest reading since the bank’s first such survey in 1998. This according to an article in Citywire.

BoAML reports that the market rally, bolstered by government stimulus to fight the coronavirus-related economic fallout, has led investors to “move past ‘peak pessimism’ but any optimism is ‘fragile, neurotic, nowhere near dangerously bullish.’ “

The bank’s chief investment strategist Michael Hartnett explained that despite skepticism, managers have been piling into equities, reportedly with exposure surging from 34% to 52% in June. The article notes, “Encouraged by May’s U.S. jobs data which smashed expectations, a net 61% of investors believe the global economy will strengthen over the next 12 months as it emerges from the sharp shock caused by lockdowns. Over a third of fund managers believe global gross domestic product will get ‘a lot stronger’.”

Survey participants identified supply chain issues, protectionism and higher taxation as the primary economic impacts of the pandemic and are forecasting 10-year annualized equity returns of just 3.4% as companies struggle towards normalcy in operations.