• Net 27% of fund managers are now overweight U.S. equities, the highest since December 2024, up from 24% in July.
  • The S&P 500 has climbed about 13% this year, outpacing Europe’s Stoxx 600 but still trailing Japanese and Korean markets.
  • Sentiment is bolstered by optimism on macro growth, AI spending, and anticipated Fed easing, with cash allocations at very low levels.

A Surge in Confidence

A growing number of global fund managers are betting big on U.S. stocks, according to Bank of America’s August Global Fund Manager Survey. The monthly poll, released Tuesday, shows a net 27% of respondents now hold an overweight position in U.S. equities—the highest level since December 2024 and a notable jump from 24% in the previous month. The shift underscores a renewed appetite for American shares, driven by resilient corporate earnings and expectations of a more accommodative Federal Reserve.

“We’re seeing a clear rotation back into U.S. assets,” said a senior portfolio manager at a European asset manager, who asked not to be identified. “The macro outlook has improved, and with AI-related capital expenditures continuing to fuel tech earnings, investors are willing to pay up for growth.”

Outperforming Europe, but Not Asia

The S&P 500 has surged roughly 13% year-to-date, far outpacing Europe’s Stoxx 600, which is up about 10% over the same period. However, U.S. equities still trail their Asian counterparts: Japan’s Nikkei 225 has gained around 18%, while Korea’s KOSPI has risen nearly 15% this year. That discrepancy highlights a regional divergence in performance, with Asian markets benefiting from a weaker yen and won, along with robust semiconductor demand.

“The U.S. is a relative outperformer against Europe, but investors are still finding better opportunities in Asia,” noted a strategist at a U.S. investment bank. “The survey reflects a preference for U.S. over Europe, but the real action is in Japan and Korea.”

Drivers Behind the Optimism

The survey, which polled over 200 fund managers with combined assets under management exceeding $600 billion, attributes the bullish sentiment to several factors: easing inflation, expectations of Fed rate cuts, and a robust AI investment cycle. Cash allocations have fallen to a net 15% underweight, signaling that managers are putting more money to work rather than sitting on the sidelines.

“With the Fed signaling a pivot, the worry of overtightening has faded,” said a fund manager at a global asset manager. “That has freed up capital for equities, and the U.S. remains the default destination for risk-on positioning.”

Implications and Outlook

While the survey reveals strong conviction in U.S. stocks, it also raises concerns about market froth. Some analysts caution that the elevated overweight could leave investors vulnerable to a pullback if earnings disappoint or if geopolitical tensions escalate. Moreover, the relatively weak performance of European and emerging markets might prompt a rotation out of the U.S., should global growth lag further.

For now, fund managers appear comfortable with their U.S. exposure, betting on continued innovation and policy support. The coming months will test that resolve as the Fed navigates its next moves and corporate earnings season kicks into higher gear.

This article was updated to reflect the latest survey details.