Investors have made the largest-ever shift away from US equities, according to Bank of America’s most recent survey. Fund managers now report being 23% underweight in US stocks — a dramatic 40 percentage point decline from the previous survey.
The rapid reversal reflects falling confidence in American markets after the S&P 500 slipped roughly 8% from its February high. BofA strategist Michael Hartnett summarized the trend as “peak US exceptionalism,” noting the record rotation out of US stocks. The survey, conducted March 7–13 and including 171 participants managing $426 billion in assets, highlights growing concerns about lofty US valuations and slowing economic growth.
Conversely, European equities are attracting more attention. Germany’s plans for substantial defense and infrastructure spending have helped boost sentiment toward the region. Investment in eurozone stocks has reached its highest level since 2021, while exposure to US equities dropped to its lowest point since June 2023.
Fund managers cited several factors behind the shift: stretched US stock valuations relative to fundamentals, signs of decelerating economic activity, and an increasingly attractive policy and fiscal backdrop in parts of Europe. These elements combined to prompt a notable reallocation of assets toward non-US regions.
The move away from US stocks does not necessarily signal a broad sell-off of equities overall, but it does indicate a rebalancing of geographic exposure. Investors appear to be rotating into markets viewed as offering better value or improved policy support. For some managers, Europe’s potential for near-term fiscal stimulus and clearer industrial investment plans made it a particularly compelling alternative.
Market watchers observe that shifts of this magnitude can influence flows and sentiment beyond the immediate reallocation. When a significant number of large funds reduce US exposure simultaneously, it can pressure US equity prices and prompt further repositioning by other investors. At the same time, increased demand for European assets can support prices and attract additional inflows.
Despite the sizeable move, investors remain attentive to near-term risks. Slower growth in the US, potential policy changes from central banks, and geopolitical developments could all affect the pace and direction of these allocations. Fund managers will likely continue to weigh valuation, growth prospects, and policy dynamics as they adjust portfolios.
In summary, the Bank of America survey shows a marked and historic reallocation away from US stocks and toward Europe, driven by valuation concerns and shifting economic and fiscal prospects. How durable this trend will be depends on upcoming economic data, corporate earnings, and policy actions across major markets.