Exposure to US equities at 11-year high, says BofA

by Sagarika Jaisinghani

Investor exposure to US stocks jumped to the highest since 2013 after the presidential election, on optimism around stronger economic growth, according to a survey from Bank of America Corp.

The poll — which canvassed fund managers with $503 billion in assets — ran from Nov. 1 to Nov. 7. About 22% of participants responded after the election results on Nov. 6 and showed a “surge in bulls,” strategist Michael Hartnett wrote in a note.

A net 23% of those investors now expect stronger global growth in the next year, compared with 10% projecting a weaker economy in last month’s survey. The proportion of fund managers overweight US stocks among these respondents nearly tripled to a net 29%, Hartnett said.

US stocks have rallied since Donald Trump’s victory in the election on bets that his pro-America policies would benefit domestic assets. The S&P 500 is at a record high, while investors have piled into small-cap stocks as they’re expected to be supported by Trump’s protectionist stance.

Citigroup Inc. strategists said the rally could now run out of steam as investors start to take profits. Meanwhile, stocks in Europe and Asia have underperformed on worries about potential tariffs.

Fund managers across the BofA survey said they expect US stocks to be the best-performing asset class next year, followed by global equities. Investors who responded after the election results said the Russell 2000 index of small-cap stocks would outperform the most.

Those participants are also bracing for a resurgence in inflation, which is now seen as the biggest tail risk.