International stocks are top trade for next five years

International stocks have officially taken the lead in global investor strategy for the next half decade, with the United States falling behind.

That’s straight from Bank of America’s latest June fund manager survey, which found that money managers are betting hard on foreign equities to deliver the best returns through 2030.

The numbers are brutal for the US—less than 25% of those surveyed think American assets will lead the pack. Just 5% expect bonds to perform best. The rest are moving their cash outside the US borders.

Bank of America strategist Michael Hartnett spelled it out in the report: “Less than [one quarter] think US assets will continue to dominate ranked returns.” Instead, investors are now crowding into emerging markets, Eurozone equities, and banks. The confidence in US stocks has dropped hard, and the reasons aren’t subtle.

Investors move money out of the dollar and into gold, ACWX, and emerging markets

So far in 2025, the numbers speak for themselves. The iShares MSCI All-Country World Index ex-US ETF (ACWX) is up 15% this year. The S&P 500? Just 2.6%. That puts ACWX at its highest outperformance versus the S&P 500 since the fund was created in 2008. The rotation out of the US isn’t a theory—it’s already happening.

Meanwhile, confidence in the US dollar has collapsed. Investor positioning in the dollar has dropped to the lowest point in over 20 years. The big driver here is President Donald Trump’s aggressive trade stance. Earlier this year, the White House slapped steep tariffs on imports.

Some of those were paused for 90 days during talks with major trade partners, but the threat hasn’t gone away. Uncertainty around trade has made investors question the dollar’s status as a safe place to park money.

That vacuum has pulled capital into gold, now the top pick for the third straight month. Hartnett said that 41% of investors ranked gold as their most crowded trade. The long run of the Magnificent 7 tech stocks being the dominant bet is now over, with that trade falling to 23%. That “Magnificent 7” trade had held the top spot for two full years, but it’s officially been dethroned.

The rest of the survey shows how bad the US outlook has become in investors’ eyes. In June, fund managers were most overweight in the Eurozone, EM, and banks, while the biggest underweights were US stocks, the US dollar, and energy. The reallocation is broad and sharp. It’s not about trimming exposure—it’s a clear message that the big money is going elsewhere.

There’s also volatility playing into all this. Tensions in Europe and the Middle East are pushing even more capital into defensive trades like gold, but investors aren’t running from all risk—they’re just picking different bets. That’s why global equities, especially in developing markets, are seeing more inflows. Stocks in those regions are cheaper than the US, and right now, that’s more attractive than anything trading at a premium on Wall Street.

One company caught in the middle of all this is Etsy. On Tuesday morning, Truist Securities bumped its price target on the company to $60, up from $55. That implies an 11% upside from Monday’s closing level. Analysts are telling investors to buy the dip, even though the company faces exposure from the De Minimis exemption being eliminated in China.

Youssef Squali, an analyst at Truist, wrote: “While the company does have exposure to the De Minimis exemption being eliminated in China, we believe it’s relatively better insulated than some of its competitors including Temu (owned by PDD, [not rated]) and Shein (private), which have started raising prices on goods as a result of the Chinese tariffs, and the end of the De Minimis exemption.”

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