Fund managers make record rotation out of US stocks - BofA

(Sharecast News) - Fund managers made the sharpest rotation in March out of US stocks and into Europe since records began in 1999, according to the latest fund manager survey from Bank of America.

The survey found that 23% of fund managers were 'underweight' US equities, the highest share since mid-2023, with a net 17% having been 'overweight' in February.

As far as European equities are concerned, 39% said they were 'overweight' relative to global markets, up from 12% in February and the biggest 'overweight' since mid-2021.

BofA said global growth was expected to slow, with the US a key drag.

A net 44% of fund managers expected the global economy to weaken over the next 12 months, up from 2% last month, opening up the largest gap to European growth expectations in the last 30 years.

The survey found that 83% of investors expected US growth to slow in the near term, up from 28% last month. However, recession concerns remained low, with 64% seeing a soft landing as the most likely scenario, 19% seeing a no landing and 11% a hard landing.

"A majority now expect the Trump administration to have a negative impact on growth and a positive impact on inflation, effectively anticipated a stagflationary environment (while last month a majority called for a higher-for-longer regime of robust growth and sticky inflation)," Bofa said.

The bank said 69% of fund managers think the theme of US exceptionalism has peaked.

The survey also found that investors had added to their UK exposure, with a newt 4% 'overweight' UK equities in March, versus 18% 'underweight' the month before.