Some 58% of fund buyers interviewed in the Bavarian capital last week say they will step up their 
allocation to the asset class within the next 12 months, while none said they were going to cut exposure. The sole reason for not increasing allocation to the asset class was the valuations of US equities. As our researchers have heard so frequently over the past months, fund selectors regard the prices of American stocks as demanding.
Everything but valuations speaks for US
This was also the case in Munich, but the objections to investing in the asset class were largely outweighed by the perceived benefits. Munich’s fund selectors almost unanimously agree that the economic recovery in the US is well underway. And that was not the only edge US equities have over Europe: American companies have less exposure to Russia, so they stand to suffer less from the conflict between Russia and the West; several fund selectors said they expect the dollar to appreciate versus the euro, which speaks for investments 
denominated in dollars. They were proved right almost instantly, as the euro plummeted versus the dollar after Mario Draghi cut the ECB’s key interest rate to a record low.
Quite some of the Munich US equity bulls said an increase of their US equity holdings would go at the expense of their allocation to European stocks. And indeed, the number of fund selectors planning to increase their allocation to European equities has dropped to a mere 18%, the second lowest level in Europe after Norway. Nevertheless, the majority of respondents keep their allocation stable, with only 27% decreasing exposure.
