Is the halo of US stocks gradually fading? Bank of America survey: Over half of fund managers are betting on international stocks outperforming US stocks in the next five years.

The latest fund manager survey by Bank of America shows that the global stock market, excluding US stocks, will outperform the US stock market in the next five years. This further confirms the increasing belief among global professional investors that the long-held absolute dominance of the US stock market in terms of capital is nearing its end. According to this latest survey by Bank of America, as many as 54% of fund managers believe that "international stocks," covering core assets in major stock markets worldwide excluding the US, will be the best performing asset class, while only 23% of fund managers focusing solely on the US stock market. Approximately 13% believe that gold, a major commodity, will offer the highest investment return, while only 5% are optimistic about bond assets. In the context of this Bank of America fund manager survey, "international stocks" specifically refer to stock markets outside the US. This includes developed markets and emerging markets such as Europe (UK, France, Germany, Italy, etc.), Japan, Canada, Australia, Singapore, as well as Chinese A-shares and Hong Kong stocks, South Korea, Taiwan, India, Brazil, South Africa, Mexico, Indonesia, among others. It essentially compares the potential investment returns of the "non-US market" with "US stocks" in the next five years. This is the first time Bank of America has asked institutional investors to predict the potential best-performing asset class over a five-year period. The responses ultimately reflect a trend of increasing popularity in "selling America" trades since April amidst President Donald Trump's significant tariff hikes and the tax cut bill expected to increase the US government budget deficit by $2.4 trillion. International stocks are seen as the best asset class for the next five years - less than a quarter of investors expect US stocks to lead global stock markets again (source: Bank of America Global Fund Manager Survey) If fund managers' predictions come true after five years, it would reverse the most profitable investment trend of recent years - heavily buying US stocks. Historical data compiled by Bloomberg shows that in the past 15 calendar years, the US stock market has outperformed international stocks significantly in 13 of those years. However, this trend is beginning to change. As of now, since 2025, the US stock market benchmark - the S&P 500 Index has seen the largest underperformance relative to the MSCI World Stock Index (excluding the US) since 2009; especially European stock markets, which have persistently underperformed US stocks for over a decade, are showing a rare trend of "beating US stocks" - after adjusting for the dollar exchange rate, the pan-European Stoxx 600 Index has outperformed the S&P 500 Index by 20% so far this year. A mid-year outlook report titled "Adapting to Policy Noise and Changes" released by Europe's largest asset manager, Amundi SA, shows that the continued uncertainty in US government policy-making and the increasingly large budget deficit will create an extremely adverse environment for the economy and markets. Therefore, the institution is shifting its focus from long-term "focus on US asset allocation" to betting on the appreciation trends in Europe and emerging markets, and is preparing to cope with a possible new round of intense market fluctuations in the US stock, bond, and currency markets caused by US White House tax policies and global trade policies. Last week, Jeffrey Gundlach, CEO of global asset management giant DoubleLine Capital, known as the "new bond king," stated that with a series of aggressive policies by Trump leading to the gradual collapse of the "American exceptionalism," a long-term devaluation of the US dollar is almost certain, and international stocks represented by emerging markets will continue to outperform the US stock market. Other key points in this latest Bank of America fund manager survey include: - When asked about the impact of the Trump administration's massive spending bill, 59% of institutional investors expect no boost in US economic activity over the next six months. - 21% of surveyed institutional investors expect US Treasury yields to rise in the next year, marking the highest proportion since August 2022. - Investors are most "overweight" on the Eurozone, emerging markets, and the banking sector; while US stocks, the US dollar, and the energy sector are not favored. - A net 31% of institutional investors indicated that they are currently or plan to "reduce" exposure to the US dollar, marking the most negative Bank of America fund manager survey reading in 20 years; while a net 36% indicated they are currently or plan to "reduce" exposure to US stocks. This market survey by Bank of America involved 190 professional institutional investors and took place from June 6th to 12th, with consultations and online questionnaire responses conducted. These institutional investors collectively manage assets totaling approximately $523 billion.