BofA update shows where active managers are putting money
Bank of America (BofA) highlighted the appeal of European equities to global investors, noting a significant $4.98 billion inflow into Europe-focused equity funds in the last week, the highest in seven years. This surge in investment interest is reflected by 39% of global investors reporting an overweight position in European stocks, the most since mid-2021.
BofA’s Style Cycle model continues to identify the region’s market as being in a ’Recovery’ phase for the thirteenth consecutive month, maintaining a positive outlook on European equities.
BofA’s recent report suggests three key domestic themes for investors to consider: companies with high forecasted EBITA margins for 2025, European firms that compete with US companies with exposure to Europe, and suppliers to European defense companies.
These themes are detailed in three separate screens, aiming to guide investment decisions based on company performance, competitive positioning, and strategic partnerships within the defense sector.
The report also revealed a record-breaking week for passive fund inflows into Europe, totaling $6.2 billion, marking the tenth consecutive week of inflows and the largest ever recorded. In contrast, active funds saw outflows of $1.22 billion, continuing a 43-week trend.
Year-to-date, Europe-focused funds have experienced $15.8 billion in net inflows, with passive funds attracting $27.3 billion and active funds losing $11.5 billion. Notably, size stocks, Germany, and Industrials led the inflows, while the UK and Quality stocks faced the largest outflows.
Despite the positive inflow data, the BofA Global 4-week EPS Revision Ratio declined to 0.82, indicating net downgrades across all regions. Europe’s EPS Revision Ratio fell to 0.98 but remains the strongest among the regions.
The IT sector, along with Sweden and Cheap value stocks, saw the largest increases in the ratio, while Real Estate, Italy, and Low Quality stocks experienced the most significant declines.
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