Investing.com -- Investor sentiment has surged to near-peak levels but has not yet reached the threshold that historically signals a major market top, according to Bank of America's latest Global Fund Manager Survey.

BofA's Bull & Bear Indicator climbed to 8.9 in June, a technical "sell signal," though investment strategist Michael Hartnett noted that cash levels ticked up slightly to 4.1% from 3.9% in May.

Hartnett said survey history suggests "this is not a 'big top' for risk assets," adding that such a turn "will be signaled by bonds & voters."

Macro optimism is firming, with global growth and profit expectations at three-month highs.

Hartnett noted that expectations for higher interest rates hit their highest level since September 2022, and 40% of fund managers now forecast Federal Reserve rate hikes in the next 12 months, up sharply from 16% previously.

A majority (55%) expect a "hawkish hold" from Fed Chair Kevin Warsh at this week's FOMC meeting.

Positioning has grown more cautious at the margin. BofA said global equity overweights were trimmed from 50% to 38%, tech exposure fell from 33% to 26%, and Europe was cut to its largest underweight since December 2024.

Managers added to Japan, materials and banks, while gold was deemed fairly valued for the first time since February 2024.

On tail risks, the bank stated that "second wave inflation" topped the list at 34%, followed by an "AI bubble" at 28%. Long global semiconductors was identified as the most crowded trade, cited by 80% of respondents, an all-time high in the survey's history.

BofA identified long bonds, Europe and consumer stocks as the top contrarian plays heading into summer.