European Fund Managers Turn Bullish Amid Fiscal Optimism, U.S. Policy Concerns

European fund managers are increasingly tilting away from U.S. markets and doubling down on Eurozone opportunities, according to Bank of America Securities' latest monthly fund manager survey.

A net 44% of respondents now expect stronger European growth over the next 12 months, up from just 29% in June. This marks a major confidence shift, as expectations of U.S. economic deceleration rise sharply under the weight of President Trump's tariff-led agenda.

U.S. vs. Europe: Diverging Paths

• 63% of surveyed managers anticipate a slowdown in U.S. growth, with fewer than 10% expecting acceleration.

• The majority view Trump's policy stance as “growth-negative and inflation-positive,” potentially worsening monetary headwinds from the Fed.

• In contrast, Euro area fiscal stimulus has overtaken U.S. policy as the biggest positive driver for global growth.

Equity Positioning and Style Preferences

The rotation in sentiment is showing up clearly in positioning:

• 81% of fund managers expect European equities to rise over the coming year.

• A net 41% report overweight exposure to European stocks—the highest level since 2021.

• Meanwhile, U.S. equities are underweight by 23%, highlighting global skepticism around American macro policy.

In terms of sector plays:

• A net 37% now favor European cyclicals over defensives, up from 18% just a month ago.

• 74% of respondents say Europe's structural underperformance could reverse if fiscal expansion is coupled with stronger EU integration.

Track the Fundamentals Behind the Shift

Get deeper data into this evolving rotation using:

• 📈 Sector Historical API: Monitor how European cyclicals vs. defensives are performing compared to U.S. counterparts.

• 📊 Industry P/E Ratio API: Evaluate valuation shifts as global equity exposure rotates from the U.S. to Europe.

Conclusion: Europe's renewed optimism rests on the back of fiscal tailwinds and growing disillusionment with the U.S. trade and inflation path. For investors, this shift could mark the early stages of a deeper structural realignment in global equity flows.