Key Insights from the BofA Survey (March 18, 2025)
The latest BofA Global Research survey reveals significant shifts in investor sentiment, driven by concerns over stagflation, trade wars, and the end of U.S. economic exceptionalism. Here are the key findings:
Biggest Drop in U.S. Equity Allocation
U.S. stock allocations experienced their largest-ever decline in March 2025. This drop was fueled by fears of stagflation (slow growth with high inflation), potential trade wars, and the waning dominance of the U.S. in the global economy.
Shift to Cash Amid Market Uncertainty
Investors increased their cash holdings to 4.1% (up from 3.5%) as a response to market volatility. This move followed a “sell signal” triggered in December 2024, signaling a cautious approach to equities.
Global Growth Expectations Decline
Global growth expectations saw their second-biggest drop on record, reflecting a more pessimistic outlook on the global economy.
Eurozone Stocks Gain Investor Appeal
While U.S. equities faced a downturn, investors shifted their focus to Eurozone stocks, reaching the highest allocation since July 2021. This trend highlights growing confidence in European markets amid U.S. economic uncertainty.
Banks Emerge as Top Sector
Banks became the world’s favorite sector, indicating investor belief in the stability or recovery of the financial sector despite global economic challenges.
Survey Details
The survey included 171 participants managing a total of $426 billion in assets, offering a comprehensive view of institutional investor sentiment.
Context: What This Means for Investors
The survey highlights growing concerns about inflation and the potential end of U.S. economic dominance. Stagflation, characterized by high inflation and stagnant growth, is a major worry for investors. The shift to cash reflects heightened caution, while the increased interest in Eurozone stocks suggests a search for opportunities outside the U.S. market.
For more insights check out our forecast for the financial market crisis: Will 2024 Bring a Financial Meltdown? Decoding Warren Buffett’s Warnings for the New Year
