Investing.com — In a recent report, Bank of America revealed the top 10 stocks most widely held by funds globally, highlighting their dominance in investment portfolios.
The list is led by Taiwan Semiconductor Manufacturing Company (TSMC), held by 95% of the relevant funds. Microsoft (NASDAQ:MSFT) and Arm Holdings ADR (NASDAQ:ARM) share the second spot, with 88% of funds holding these stocks.
Samsung Electronics (KS:005930) follows with 83%, while India’s HDFC Bank Limited (NYSE:HDB) and China’s Tencent Holdings Ltd (HK:0700) each appear in 79% of portfolios.
Rounding out the list are Amazon (NASDAQ:AMZN), NVIDIA (NASDAQ:NVDA), and ASML (AS:ASML), each held by 77% of funds, and Japan’s Keyence (TYO:6861) with a 76% holding rate.
The list demonstrates that the technology sector continues to dominate global investment portfolios.
In 2024, long-only funds significantly increased active exposure to equities, adding $40 billion relative to benchmarks. However, fund managers faced headwinds, as overweight positions underperformed underweights in most regions except the US, where overweights outperformed marginally by 0.2%.
Sector-wise, US Industrials saw the biggest increase in active equity exposure, BofA notes, citing its analysis of 8,400 long-only funds.
US funds also added exposure to Financials “but struggled to increase active exposure to the largest Tech stocks given the substantial index weights of these stocks,” the bank’s strategists led by Nigel Tupper said in the note.
Conversely, in Asia and Emerging Markets, funds reduced their active exposure to Financials while raising their allocations to Tech.
Looking ahead into 2025, BofA’s Triple Momentum analysis indicates a favorable outlook for both Financials and Tech, suggesting these sectors may present compelling opportunities for increased active exposure.
In a separate January Fund Manager Survey (FMS), BofA highlighted strong investor sentiment toward the US dollar and equities, while signaling bearish views on most other asset classes.
The survey indicates that cash allocations have fallen to 3.9%, their lowest point since June 2021. This reduction triggered a second consecutive “sell” signal under BofA’s Cash Rule, a pattern historically linked to weaker equity performance in the months that follow.
A net 41% of fund managers report being overweight equities, though this represents a decline from the three-year peak of 49% recorded in December.
BofA points to a “big January equity rotation from US stocks to Europe,” as exposure to US equities dropped sharply from a net 36% overweight to 19%. At the same time, Eurozone stocks shifted from a net 22% underweight to a 1% overweight, representing the largest monthly increase in Eurozone exposure in 25 years.
The survey also reveals bearish sentiment across other asset classes. Commodities are underweighted by 6% of managers, while 11% are underweight cash, and 20% are underweight bonds.
