A recent Bank of America fund manager survey highlights a significant shift among global investors from US stocks to eurozone equities and emerging markets. With concerns surrounding US trade policy under President Trump causing uncertainty, institutional investor sentiment towards US assets has dampened, resulting in decreased allocations and the lowest dollar holdings seen in two decades. Conversely, sentiment towards eurozone equities has improved markedly, showing a net 35 percent overweight, signalling a potential resurgence in international investment and a cautious return to risk assets.
Despite the broader recovery, UK equities remain out of favour, with only a modest net 5 per cent overweight. Investors appear cautious amid ongoing uncertainty in the region.
The closely watched monthly poll of 190 institutional investors overseeing a combined $523 billion in assets reveals a decisive rotation away from American assets following the turbulence caused by President Trump's renewed trade tariff threats.
With dollar holdings now at their lowest levels in two decades and allocations to American equities sharply reduced, a net 35 percent of respondents said they were underweight in US stocks.
BoA's analysts describe the post-April rally as driven by what they dubbed the 'Taco trade' - a cynical nod to investors' belief that 'Trump Always Chickens Out' after making initial aggressive threats.
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