(Feb 20): US stocks haven’t been this out of favour relative to their international peers in more than five years, according to Bank of America Corp’s Michael Hartnett.
American equities have attracted only US$26 out of every US$100 of inflows to global equity funds so far this year, the strategist wrote. That’s the smallest slice since 2020 and compares with a peak of US$92 in 2022.
The figures suggest that the theme of so-called US exceptionalism, or sustained outperformance, was ending with lower relative inflows to the country’s assets, rather than outright outflows, Hartnett said.
The S&P 500 Index is virtually flat in 2026, compared with an almost 8% advance in an MSCI World Index that excludes the US. Investors have a reduced appetite for US equities over concerns about excessive artificial intelligence spending by big tech companies, dollar weakness driven by Trump administration polices and a growing preference for cyclicals that benefit from stronger economic growth.
Stock funds in Europe, Japan and other international developed markets have attracted a combined US$125 billion ($158.7 billion) so far this year, against just US$35 billion for the US, the BofA strategists said in a note, citing EPFR Global data.
The flow numbers reinforce Hartnett’s comments earlier this month that US trade policies are creating a “new world order.” He has maintained a preference for international equities since late 2024.
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