BofA’s clients say US stocks will be best performing asset in 2025

Investing.com — According to Bank of America’s November Global Fund Manager Survey, U.S. stocks are projected to be the best-performing asset class in 2025, with 43% of respondents favoring them over other assets, including global stocks and gold.

BofA said the survey, conducted shortly after the U.S. election, saw a strong shift in investor sentiment as expectations for growth surged.

The bank’s analysts report that U.S. growth expectations jumped from -22% in October to 28% in November, while global growth expectations jumped from -10% to 23%, marking the highest level since July 2021.

The survey also revealed significant shifts in asset preferences, with a surge in investors’ overweight positions in U.S. stocks, from 10% to 29%, reaching the highest levels since August 2013.

Small-cap stocks are also in focus, with BofA revealing that 35% of respondents showed a preference for smaller companies over large-cap, while high-yield (HY) bonds saw a major uptick, with a 41% overweight, the highest in three years.

Investors are said to be increasingly optimistic, with BofA’s Bull & Bear Indicator rising to 6.2, though it has not yet reached “extreme” bullish levels, which BofA defines as above 8.

Respondents also identified potential bullish catalysts in 2025, including an acceleration in China’s economic growth (35%) and possible U.S. tax cuts (33%).

On the downside, however, 50% of BofA clients cited a disorderly rise in bond yields as the most significant risk to markets, followed closely by concerns over a potential global trade war, identified by 35% of respondents.

BofA said cash levels among investors rose modestly to 4.3% pre-election but slightly decreased to 4.0% post-election, indicating a partial return to risk-on positioning.