Investors flock to Europe as US exceptionalism fades: BofA survey

Investors are making a sharp pivot from the United States to Europe, betting that the era of American exceptionalism has peaked while positioning for a European resurgence, driven largely by Germany’s fiscal stimulus and increased defence spending. 

The latest Fund Manager Survey from Bank of America, conducted by analysts Andreas Bruckner and Sebastian Raedler, has revealed the most significant rotation from US to European equities since records began in 1999. 

A net 39% of fund managers now hold an overweight position in European equities, up from 12% last month and the highest level since mid-2021. 

At the same time, a net 23% of investors report being underweight US stocks, compared to a net 17% overweight in February. This marks a 40-percentage-point swing in US equity allocation within a month, the largest on record. 

For years, Wall Street has dominated global stock markets, buoyed by strong economic growth and technological innovation.  

But that dominance is now being questioned, with 69% of fund managers believing the era of “US exceptionalism” has come to an end. 

The shift stems largely from mounting concerns over the US economic outlook. A striking 83% of investors now expect US growth to slow, up from just 28% last month—the sharpest deterioration in sentiment in years. 

While fears of a deep recession remain limited—64% of fund managers still anticipate a soft landing—many are increasingly bracing for economic stagnation or mild stagflation, particularly as the Trump administration pursues higher tariffs and threatens a global trade war. 

The European economy, often criticised for its sluggish growth and bureaucratic hurdles, is now seen as a bright spot.

A net 60% of investors expect stronger European growth in