• A record net 91% of fund managers view U.S. equities as overvalued, according to Bank of America’s August Global Fund Manager Survey.
  • Emerging-market (EM) equities are seen as undervalued by a net 49% of respondents, the highest reading since February 2024.
  • Latin American stocks have outperformed both EM and the S&P 500 year-to-date, yet trade at a discount to their 10-year historical valuation.

Stretched Valuations in U.S. Equities

Investor skepticism toward U.S. stocks has reached a new high, with Bank of America’s latest survey revealing a record net 91% of fund managers believe the market is overvalued. This sentiment aligns with earlier bearish episodes captured in 2025 surveys, where stretched valuations and macro uncertainty weighed on allocations.

One portfolio manager, who requested anonymity due to company policy, noted, "The rally in megacaps has masked broader valuation concerns, but the math is getting harder to justify." The survey, which polls roughly 400 institutional, mutual, and hedge fund managers globally, underscores growing caution even as major indices hover near record levels.

Emerging Markets Gain Appeal

In contrast, EM equities—particularly in Latin America—are attracting attention as undervalued opportunities. A net 49% of respondents flagged EM as undervalued, the highest since February. BofA’s research highlights that Latin American stocks have surged roughly 22% year-to-date, outpacing both the broader EM index and the S&P 500, while still trading at a mid-teens discount to their 10-year average.

"The combination of outperformance and attractive valuations is rare," said a strategist familiar with BofA’s findings. "With expected rate cuts in Brazil, Mexico, and Colombia, the setup could improve further." Financials, now the largest sector in LatAm indices, have been a key driver of recent gains.

Persistent Bearish Backdrop

The August survey echoes themes from earlier this year, when BofA recorded one of its most bearish readings in decades. Growth expectations remain subdued, and allocations to global equities—especially tech—have stayed lean. While U.S. markets have defied pessimism, the survey suggests fund managers are increasingly eyeing alternatives.

Bank of America declined to comment beyond its published materials, but its research team noted that EM’s relative discount and policy tailwinds could sustain interest. For now, the debate over U.S. valuations shows no signs of easing.