European fund managers have embarked on a sharp rotation out of their home market and into US equities, according to the latest Bank of America Merrill Lynch’s European Fund Manager Survey, published today (19 May 2026).
While a net 35% of fund managers were overweight European equities in February’s survey – which was collated at the start of the US-Iran war – a net 4% are now underweight the region. Instead, some 20% are now overweight US equities, compared to a net 22% underweight in February’s survey.
According to BoA, this represents one of the most extreme Europe-US rotations on record, based on the bank’s data stretching back to 1999. Overall, 51% of European fund managers expect US equities to outperform their European counterparts over the next 12 months – a 22 percentage-point increase from 29% in April .
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Unsurprisingly, the fund managers’ market views are mirrored in their economic sentiment.
Overall, a net 32% of European fund managers expect the bloc’s economic growth to slow “over the coming months”. This contrasts starkly with February’s survey, which found that a net 74% of managers expected an acceleration in growth, following German fiscal stimulus and a continent-wide uptick in defence spending.
Managers are more optimistic on a broader basis, with only 14% of respondents believing the global economy will weaken. This is a significant fall compared to last month’s survey, which amounted to 36% on a net basis. According to BoA, this improvement in investor sentiment is due to “resilient macro data underpinning consensus expectations of US growth holding up”.
Despite growth concerns for Europe, a net 61% of managers deem a recession across the continent to be unlikely, which is unchanged from March’s report.
While only 23% of managers see upside for European equities in the near term, 58% believe there will be some upside within the next 12 months. While longer-term sentiment paints a more positive picture, both figures are still lower than they have been since April 2025.
