Tech holds the crown, but defensive positioning grows: BofA survey

Technology remains the top preference among investors, but fund managers have clearly shifted toward a more defensive stance, according to Bank of America Securities’ August Asia Fund Manager Survey.

“Tech is still king, but defensives are rising,” BofA Securities said.

The survey further shows that 59% of investors are hedging AI downside risk by rotating into value, cyclical and defensive sectors, more than double the level seen in July. Nearly two-thirds of investors also require clearer evidence of AI monetization before increasing their exposure to AI-related stocks.


The defensive shift is particularly evident in Asia ex-Japan. Investors rotated out of cyclicals and technology and into defensive sectors including Utilities, Banks, Staples, Healthcare and Telecoms. Industrials and Tech Hardware recorded the sharpest declines in investor positioning.

At the same time, investor optimism toward Asia ex-Japan equities rose to the 89th percentile in August, while investors increasingly viewed the region’s equities as undervalued.

The combination of rising optimism toward Asia ex-Japan equities and a more defensive sector allocation highlights a shift in how investors are positioning within the region.

Japan positioning remains concentrated

In Japan, investor exposure remains heavily concentrated in Banks and Semiconductors, with Banks rising to a historical high, according to BofA.

The positioning comes as investors increasingly anticipate a shift in Japanese monetary policy. Nearly 60% expect the next Bank of Japan rate hike to occur as early as next month, in line with BofA’s economist expectation.

Most investors also see USD/JPY at 165 as the likely trigger for intervention by Japanese authorities.

Investors become more selective on the AI trade

BofA said views on the semiconductor cycle weakened sharply in August, pointing to a less favourable stance toward the sector.

At the same time, Power & Energy remain the most favored segments of the AI value chain, indicating that investors continue to favour selected areas linked to AI infrastructure even as their broader view of the semiconductor cycle weakens.

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