A latest global fund manager survey report by Bank of America (BofA) released on Tuesday shows that an increasing number of investors are reassessing their asset allocation direction, with international stock markets replacing U.S. stocks as the most promising asset class for the next five years.
The survey, conducted between June 6 and June 12, covered professional investors worldwide. The results show that more than half (54%) of respondents believe international stock markets will outperform the U.S. market over the next five years. Only 23% of fund managers remain optimistic about U.S. stocks, while 18% consider gold, treasury or corporate bonds more attractive.
The Dimming Aura of U.S. Stocks and the Rising Attention on International Markets
Although U.S. stocks rebounded strongly after initial turbulence at the start of the year, with the S&P 500 index approaching historical highs, investors seem to lack confidence in the continued rise of the U.S. market. Particularly against the backdrop of rising uncertainty in trade policies led by the Trump administration, U.S. stocks may face challenges such as valuation compression and growth slowdown in the coming years.
Meanwhile, emerging markets and regions in Europe and Asia are regaining global investment due to more attractive valuations, relatively controlled inflation, and expected relaxed monetary policies.
“This is a global capital rotation phenomenon, reflecting the market's search for undervalued opportunities after a decade-long bull market in U.S. stocks,” commented one surveyed strategist.
Tail Risks Remain, Focus on Trade Wars and Inflation
The survey also indicates that concerns over potential “tail risks” in the market persist among investors. Of those surveyed, 47% cited the possibility of a global recession triggered by Trump’s trade policies as the biggest risk. Furthermore, continued rate hikes by the Federal Reserve to counter inflation, and rising U.S. bond yields leading to credit pressures, are seen as key factors affecting market stability.
BofA strategists pointed out: “This reflects the widespread concern among investors that U.S. policy uncertainty may spill over into global markets and affect the performance of risk assets.”
Investor Confidence Rebounds, but Caution Remains
Despite external risks, data from June indicates a significant rebound in investor sentiment since the “Liberation Day” in April (when Trump announced a new round of tariff policies). An indicator tracking investor risk appetite, cash allocations, and equity proportions rose to 5.4 in June, a three-month high.
Additionally, 66% of respondents expect the global economy to achieve a “soft landing” in the next 12 months, a significant increase from 37% in the April survey. This suggests that more fund managers are shifting from a “recession expectation” to a “moderate growth” outlook.
A BofA analyst noted: “Investor sentiment has returned to a more neutral and balanced state. While not extremely optimistic, pessimism no longer dominates.”
Strategic Advice: Diversification and Overseas Opportunities as the Main Theme
In the context of high U.S. stock valuations and increasing macro risks, global investors are actively seeking overseas investment opportunities. Fund managers indicated in the report that they will increase allocations to emerging markets and European stocks, while also focusing on defensive assets like gold and bonds to counter potential market volatility.
In the coming months, the Federal Reserve's interest rate policy, Trump’s trade moves, and geopolitical changes will continue to dominate global asset prices. For investors, this is a critical period to reassess risk exposure and expand their global view. U.S. stocks may no longer be the sole choice, as international markets regain trust.
