Investing.com – In a recent report, Bank of America revealed the top 10 stocks most commonly held by mutual funds globally, highlighting their dominance in investment portfolios.
The list is led by Taiwan Semiconductor Manufacturing Company (TSMC), which holds 95% of the relevant assets. Microsoft (NASDAQ:) and Hand Holdings ADR (NASDAQ 🙂 Share second place, with 88% of funds holding this stock.
Samsung Electronics (KS 🙂 follows with 83%, while India’s HDFC Bank Limited (NYSE 🙂 and China’s Tencent Holdings Ltd (HK 🙂 each appear in 79% of the portfolio.
Rounding out the list are Amazon (NASDAQ:), NVIDIA (NASDAQ:) and ASML (as:), each holding 77% of assets, and Japan’s Key (Tyo 🙂 with a retention rate of 76%.
The list shows that the technology sector continues to dominate global investment portfolios.
In 2024, long-only funds significantly increased active equity exposure, adding $40 billion over benchmarks. However, fund managers faced headwinds, as overweight positions were overweight in most regions, except the US, where overweights edged up slightly by 0.2%.
Among the sector’s industries, US industrials saw the largest increase in active equity exposure, Bofa noted, citing its analysis of 8,400 long-only debt funds.
US funds also added exposure “but struggled to build active exposure to top technology stocks given the significant index weights of these stocks,” the bank’s strategists led by Nigel Tupper said in a note.
Conversely, in Asia and emerging markets, funds have reduced their active exposure to financials while increasing allocations to technology.
Looking ahead to 2025, BOFA’s triple momentum analysis points to a favorable outlook for both financials and technology, suggesting these sectors could provide compelling opportunities for increased active exposure.
In a separate survey of fund managers (FMS) for January, BOFA highlighted strong investor sentiment towards the US dollar and equities, while signaling bearish sentiment across most other asset classes.
The survey shows that cash withdrawals fell to 3.9%, their lowest point since June 2021. This reduction triggered the second consecutive “sell” signal under BOFA’s monetary rule, a pattern historically associated with weaker equity performance in the months ahead.
A net 41% of fund managers report that they are bullish on stocks, although that represents a decline from the three-year peak of 49% recorded in December.
BOFA points to a “large January capital rotation from US equities to Europe”, as exposure to US equities plummeted from a net 36% overweight to 19%. At the same time, Eurozone stocks moved from a net 22% underweight to a 1% overweight, representing the largest monthly increase in exposure to the eurozone in 25 years.
The survey also reveals bearish sentiment in other asset classes. Commodities are underweight for 6% of managers, while 11% are underweight in cash and 20% are underweight in bonds.
