A new report from Bank of America finds that investor allocations and exposure to U.S. stocks is at a record high.
According to Bank of America Global Research, investors are allocating capital to U.S. equities at the expense of European stocks, commodities, and cash.
The report attributes the outsized shift to U.S. stocks to a range of factors, notably continued expectations of U.S. economic growth.
Investors are also betting that Donald Trump’s second term as president will bring with it tax cuts and deregulation.
There is also bullish sentiment around continued interest rate cuts from the U.S. Federal Reserve in the year ahead.
Bank of America notes that investors’ allocation to cash is currently at its lowest level since April 2001, and exposure to commodities is at its lowest level since June 2017.
Investors also continue to underweight European stocks in favor of American investments.
Bank of America concludes its report by noting that investors are now the most overweight U.S. equities relative to European stocks since June 2012.
