A BofA Global Research published on Tuesday has highlighted that global investors have cut their holdings of U.S. stocks by a record amount in the past two months.
The move spells a trend that is likely to continue, given that a record number of managers have signaled plans to keep cutting their exposure.
Respondents to BofA’s monthly survey of fund managers as published by Reuters were a net 36% underweight U.S. equities, the most in nearly two years, a number that has plunged by 53 percentage points since February, the biggest such fall on their records.
A majority think the trade war that triggers a global recession is the biggest risk for markets, according to the survey.
U.S. President Donald Trump’s aggressive tariff plans have sparked a selloff in U.S. assets, including stocks, the dollar and Treasury bonds.
The market rebounded on Monday, but the broad-market S&P 500 index is still down about 8% so far this year.
BofA polled 164 investors with $386 billion of assets under management.
Investors showed further signs of fear in the survey, particularly about U.S assets.
A net of 42% of investors said they expected a global recession, the most since June 2023 and the fourth-highest level in the past 20 years.
In addition, 73% said they thought the theme of “U.S. exceptionalism” has peaked – the idea has powered markets in recent months – and relatedly 49% said they thought the most crowded trade in markets was now “long gold”, displacing bets on U.S. tech giants for the first time in 24 months.
A net 61% expect the U.S. dollar to depreciate over the next 12 months, the most since May 2006. The currency has tumbled sharply against most others in the past few weeks, with the euro, Japanese yen and Swiss franc all gaining sharply. (AFP)
