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Investing.com -- U.S. equities have fallen out of favor with global asset managers, according to Citi’s latest Quantitative Global Macro (BCBA:BMAm) Strategy note.
The bank explained that based on its analysis of asset allocation trends from managers representing over $20 trillion in assets under management, the U.S. equity market is now the least preferred globally.
“We saw a further reduction of US assets (equities, bonds, USD),” Citi analysts wrote, noting that U.S. equities have now dropped to a “neutral allocation and are the least preferred equity market.”
In contrast, asset managers have upgraded their views on European and Japanese stocks, making them the “most preferred in equity-land.”
This shift is said to be part of what Citi described as a growing “Sell America Trade,” a consensus strategy that also extends to currency markets.
“The USD has continued to see downgrades,” the analysts said, while “EUR and JPY have seen further upgrades.” They added, “There is no disagreement amongst the managers on the USD shorts or the EUR longs.”
Beyond equities and FX, Citi noted a rotation within fixed income and commodities. Global bonds, particularly from the U.S. and Japan, were downgraded.
However, managers remain overweight on European sovereign bonds and emerging market local debt. In commodities, gold received an upgrade.
Citi emphasized that while U.S. equities are broadly neutral, the allocation shift is notable for its breadth: “Managers are long international equities and now neutral in the US.”
The firm also flagged that disagreement is highest around U.S. equities and rates, whereas positioning in commodities and FX shows strong consensus.
Among the current consensus long trades: EUR, precious metals, U.S. real rates, JPY, and EU/JP equities. Short trades include Japanese government bonds, oil, USD, CHF, and U.S. bonds.