Staff Reporter
Bank of America recently released a report detailing the ten most widely held stocks among global funds, showcasing their strong presence in investment portfolios.
Leading the pack is Taiwan Semiconductor Manufacturing Company (TSMC), with an impressive 95% of relevant funds holding this stock. Microsoft (NASDAQ:MSFT) and Arm Holdings ADR (NASDAQ:ARM) share the second position, each held by 88% of funds.
Following closely is Samsung Electronics (KS:005930) at 83%. Notably, HDFC Bank Limited (NYSE:HDB) from India and Tencent Holdings Ltd (HK:0700) from China both appear in 79% of portfolios.
Completing the list are Amazon (NASDAQ:AMZN), NVIDIA (NASDAQ:NVDA), and ASML (AS:ASML), each held by 77% of funds, along with Keyence (TYO:6861) from Japan, which boasts a 76% holding rate.
This report underscores the continued dominance of the technology sector in global investment strategies.
In 2024, long-only funds significantly ramped up their active exposure to equities, adding $40 billion relative to benchmarks. However, fund managers encountered challenges as overweight positions generally underperformed compared to underweights in most regions. The exception was the U.S., where overweights marginally outperformed underweights by 0.2%.
According to Bank of America’s analysis of 8,400 long-only funds, the U.S. Industrials sector experienced the largest increase in active equity exposure. U.S. funds also increased their allocations to Financials, but faced difficulties boosting exposure to major Tech stocks due to their substantial index weights, as noted by the bank’s strategists led by Nigel Tupper.
In contrast, funds in Asia and Emerging Markets reduced their active exposure to Financials while increasing their investments in Tech.
Looking ahead to 2025, Bank of America’s Triple Momentum analysis points to a favorable outlook for both the Financials and Tech sectors, suggesting these areas may offer compelling opportunities for increased active exposure.
In a separate January Fund Manager Survey (FMS), BofA highlighted strong investor sentiment towards the U.S. dollar and equities while indicating bearish views on most other asset classes.
Notably, cash allocations have dropped to 3.9%, their lowest level since June 2021. This decline has triggered a second consecutive “sell” signal under BofA’s Cash Rule, a pattern historically associated with weaker equity performance in the ensuing months.
Currently, a net 41% of fund managers report being overweight in equities, though this figure has decreased from a three-year peak of 49% recorded in December. BofA observes a significant January equity rotation from U.S. stocks to Europe, with exposure to U.S. equities falling sharply from a net 36% overweight to 19%.
Conversely, Eurozone stocks shifted from a net 22% underweight to a 1% overweight, marking the largest monthly increase in Eurozone exposure in 25 years.
Additionally, the survey reveals bearish sentiment across other asset classes. Commodities are underweighted by 6% of managers, while 11% are underweight cash, and 20% are underweight bonds.
