Fund managers are avoiding U.S. stocks like never before in this bull market

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BAML’s survey shows love for European stocks

“Uncle Scram” — that is how strategists described the latest moves by fund managers.

Allocations to U.S. stocks have fallen to their lowest levels since January 2008, according to Bank of America Merrill Lynch’s global fund manager survey for April, released Wednesday.


Positioning in U.S. equities has dropped to a net 20% underweight, down from 1% overweight a month ago. This allocation is below the long-term average, noted the strategists behind the survey.

The catalysts behind the scramble away from American stocks include their expensiveness, as well as growing worries about delays for much-anticipated U.S. tax cuts.

“A net 83% of investors think [the] U.S. is the most overvalued region, the highest response on record,” said BAML strategists Michael Hartnett and Jared Woodard in a note.

Back in early 2008, the S&P 500 SPX, +0.30% was on its way to a big loss for that year. The U.S. stock benchmark eventually found a bottom in March 2009, when the current bull market is widely viewed as having begun.

So what do fund managers like now?

Love for eurozone stocks EZU, +1.31%  has surged, despite the French presidential election, which has its first round of voting on Sunday, the strategists said. The rotation last month to eurozone stocks from U.S. equities was the fifth largest since 1999.

Opinion: No matter which front-runner wins the French election, it’s a revolution

Respondents see a 5% or 10% drop for European stocks if populist candidate Marine Le Pen become France’s next president, but investors have become less worried about the European Union’s possible disintegration, the BAML survey found.

Last month, the survey revealed that 67% of fund managers expected a bear market for stocks if the 10-year Treasury yield rise to a range of 3.5% to 4%.

On Thursday morning, the S&P was trading slightly higher, putting the index up more than 4% for the year.

This story was first published on April 19, 2017.

Read this article in its original format at 

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