BofA Says Share of US Stocks in Global Flows Has Plunged in 2025

Bank of America strategists report a significant decline in the share of global equity flows directed to US stocks in 2025, attracting less than 50% of total flows year-to-date, a sharp decrease from 72% in 2024. This slowdown is underscored by foreign inflows plummeting from $34 billion in January to under $2 billion in the past three months, with the shift attributed to trade war concerns challenging the narrative of American exceptionalism.

Analysis

According to a Bank of America research note citing EPFR Global data, the proportion of global equity flows allocated to U.S. markets has experienced a significant contraction in 2025. Year-to-date, U.S. stock funds have captured just under 50% of total global flows, a sharp decline from the 72% share recorded in 2024. This trend is further substantiated by a dramatic deceleration in foreign capital, with inflows plummeting from $34 billion in January to less than $2 billion over the most recent three-month period. BofA strategists attribute this pronounced shift in investor positioning to escalating trade war tensions, which are increasingly challenging the long-held investment thesis of 'American exceptionalism' and prompting a re-evaluation of relative market attractiveness.

Key Decisions for Investors

• Investors should reassess their exposure to U.S. equities, as the sharp reduction in foreign inflows may signal a potential headwind for market performance and valuations.
• Closely monitor developments in trade policy and tariff negotiations, as these are the primary drivers cited for the reversal in capital flows and will likely dictate future sentiment.
• Consider increasing geographic diversification, as the capital rotating out of the U.S. is likely being reallocated to other global markets that may now offer a more favorable risk-reward profile.