As the stock market recovers from April lows, recent data indicates that institutional sentiment toward United States equities has turned sharply negative, marking a historic shift in global portfolio allocation.
Specifically, a net 38% of fund managers reported being underweight U.S. equities in early May 2025, representing the lowest allocation level since May 2023, according to the Bank of America Global Fund Manager Survey.
Excluding that brief period, the current reading is the weakest positioning since the lead-up to the 2008 global financial crisis, highlighting widespread caution among institutional investors.
Moreover, the data revealed a striking turn in sentiment over the past five months. During this period, the net percentage of managers overweight U.S. stocks plummeted by approximately 70 percentage points, the sharpest decline on record.
Shifting to Eurozone stocks
Conversely, fund managers have significantly increased their exposure to Eurozone equities. In fact, the net overweight in Eurozone versus U.S. equities now stands near 75%, marking the highest divergence since October 2017.
Interestingly, the figure was -62% just four months ago, representing a complete reversal and the lowest Eurozone-overweight reading since 2012.
These shifts suggest mounting concern over U.S. equity valuations, macroeconomic uncertainty, and potentially more attractive opportunities abroad.
At the same time, the breadth and speed of this rotation signal a historic realignment in global equity preferences among professional investors. This shift comes as trade tensions between the United States and China ease.
Notably, most Wall Street analysts warned that a recession might be the least damaging outcome during the height of the trade war. However, recession calls have since declined sharply, with institutions such as JPMorgan lowering the probability to below 50%.
Complicating the picture further, on May 16, Moody’s downgraded the U.S. credit rating, citing persistent fiscal deficits. As a result, for the first time in history, all three major credit rating agencies now rate U.S. sovereign debt below their top tier.
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