The attractiveness of U.S. stocks relative to other major global markets has fallen to its lowest level in over five years. According to Michael Hartnett, Chief Investment Strategist at Bank of America, only $26 out of every $100 flowing into global equity funds this year has been allocated to U.S. stocks—the smallest share since 2020 and a sharp decline from the peak of $92 in 2022. Hartnett suggests that this shift signals the fading of the long-debated "American exceptionalism" narrative, which posited that U.S. assets would consistently outperform global peers. However, rather than a large-scale withdrawal from U.S. assets, the change reflects a relative decline in allocation preference.

In terms of market performance, U.S. equities have notably lagged behind international markets this year. Since the beginning of 2026, the S&P 500 has remained nearly flat, while the MSCI World Index ex-U.S. has gained close to 8%. Investor caution toward U.S. stocks stems from several concerns, including excessive investment in artificial intelligence by large technology companies, a weaker U.S. dollar amid policy shifts under the Trump administration, and a growing preference for cyclical stocks as global growth expectations improve.

Fund flow data supports this trend. Citing EPFR Global figures, Bank of America reported that equity funds focused on Europe, Japan, and other developed international markets have collectively attracted around $125 billion in inflows this year, compared with only about $35 billion for U.S. stock-focused funds. Hartnett has previously noted that U.S. trade policies are shaping a "new world order" and may reconfigure global capital allocation patterns. Since late 2024, he has maintained a preference for international equities, arguing that overseas markets offer increasing relative appeal under current macroeconomic and policy conditions.