BofA European Fund Manager Survey

BofA - European Fund Manager Survey esearch_media%40bof...

BofA - European Fund Manager Survey esearch_media%40bof...

European Fund Manager Survey Lower conviction, more concentrated positioning  15 September 2026 | Equity Strategy | Europe

Key takeaways • The bull case soſtened, but investors continue to expect positive equity returns over the next 12 months • Policy perceptions turned more supportive, yet higher-for-longer remains the dominant macro regime • Conviction is concentrated in few sectors, while AI has emerged as a key source of downside risk

An overall total of 190 panellists with $512bn AUM participated in the survey. 170 participants with $470bn AUM responded to the global FMS questions and 87 participants with $211bn AUM responded to the regional FMS questions.

Survey period: 4th Sep 2026 to 10th Sep 2026.

Investors/clients are encouraged to sign up to participate in the Survey. This can be done by contacting Michael Hartnett or your BofA sales representative.

Participants in the survey receive the full set of results for the months in which they participate.

Soſter bull case: A net 39% expect stronger growth over the next 12 months, a net 25% expect economic acceleration in coming months, and a net 39% expect near-term market upside. Expected upside in 12m forward EPS over the next 12 months fell to 6.3%, while the share citing earnings upgrades as the main driver of market gains declined to 64%. Nevertheless, expected 12-month equity returns rose to 6.3%, with 43% of investors expecting European and US equities to perform similarly over the next 12 months. Globally, a net 5% of investors are underweight Europe and a net 8% expect to underweight the region over the next year.

The upside: lower inflation; the downside: AI disappointment: Declining energy prices and easing inflation remain the main upside driver for global growth, cited by 54% of European investors. However, 43% of participants view AI investment disappointment as the largest downside risk to global growth. In addition, 29% identify a US equity/AI-related valuation correction as the top catalyst for a broader market correction. No investor cited AI, digital and data-center investment as a driver of accelerating European growth.

Fiscal policy is seen as supportive: At the policy level, a net 11% see monetary policy as restrictive, down month-on-month, while a net 14% view fiscal policy as stimulative, the highest reading in two years. A net 39% of investors expect lower European core inflation over the next 12 months, while euro- area bond-yield expectations have swung from a net 15% expecting higher yields to a net 21% expecting lower yields. Nevertheless, higher-for-longer remains the dominant macro regime, backed by 61% of respondents.

Cyclicals in favour: A net 39% of investors expect cyclical outperformance near term, the highest since Feb '26. Positioning within cyclicals is concentrated in Basic Resources (top OW sector at a net 29% OW), Tech (net 25% OW) and Industrials (net 7% OW), which are also the top-ranked cyclical sectors expected to outperform over the next 12 months. Retail is at the bottom at a net 50% UW, the weakest reading since Jul '14, while Consumer Pds & Svs fell to a net 43% UW, its weakest reading since Jul '07. Energy increased the most, to a net 11% OW, while Utilities declined the most, to a net 21% UW, the lowest since Jan '22.

European growth: growth optimism soſtens