US stocks pie in global flows has plunged in 2025: BofA

The share of global equity flows heading to the US has plunged in 2025, strategists at Bank of America Corporation said, as the trade war raises doubts about so-called American exceptionalism.

US stock funds attracted just under half of total flows so far this year, compared with 72% in 2024, the BofA team said in a note, citing figures from EPFR Global. Foreign inflows slowed to less than $2 billion in the past three months from $34 billion in January.

President Donald Trump's erratic trade policy, a ballooning fiscal deficit and a slumping dollar have strained investor enthusiasm for American assets. While the S&P 500 has recovered from an April low after Trump paused the harshest tariffs in a century, the benchmark still trails international peers this year.

Some asset managers have warned that the US has ceased to be a secure destination for foreign investors because of political risks posed by the Trump administration. A recent tech-led rebound in the S&P 500 to fresh records suggest investors are too complacent about the economic impact of higher tariffs, forecasters at UBS Group AG said this week.

Markets have also quickly shaken off the latest signs of rising tension between the President and Federal Reserve Chair Jerome Powell. Trump, who has repeatedly called for the central bank to lower borrowing costs, has discussed the possibility of firing the Fed chief with Republican lawmakers.

BofA strategist Michael Hartnett said in Friday's note that investors were "front running" a Fed capitulation on interest rates. He reiterated his view that a bubble was brewing in US stocks, and that the clearest sign of this would be if the market ignored an increase in inflation expectations and bond yields hitting new highs.