Most investors see international stocks beating US peers over the next 5 years, BofA survey shows

• Most investors think the US stock market will underperform global stocks over the next five years
• 54% of fund managers believe international stocks will be the top-performing asset, BofA's latest survey found.
• Investors see a global recession triggered by tariffs as the largest tail risk for markets.

Investors see years of US stock outperformance coming to an end, with most respondents in a survey from Bank of America eyeing international stocks as the top performer in the coming years.

Global fund managers surveyed by the bank indicated they felt more optimistic about international stocks than US equities this month. More than half of investors—54%—surveyed from June 6 to June 12 said they believe international equities would be the best-performing asset over the next five years, BofA strategists wrote on Tuesday.

That compares to just 23% of investors who think US stocks will be the best-performing asset, and a combined 18% of investors who believed the best-performing asset would be either gold, government bonds, or corporate bonds.

The pessimism hanging over US markets appears to stem from President Donald Trump's trade war and concerns about the effects of tariffs on the global economy.

47% of fund managers said they believe a trade war triggering a global recession was the largest "tail risk" to markets. A worldwide recession has been the largest perceived tail risk to markets for three months in a row.

Other prominent tail risks investors were eying this month include the Fed hiking interest rates to combat inflation, or a credit event triggered by the "disorderly" rise in bond yields, the bank said.

Still, strategists said that investor sentiment had picked up in Bank of America's June survey compared to recent months, and the mood has recovered back to pre-Liberation Day levels.

A sentiment gauge that tracks investors' growth expectations, cash level, and allocation to stocks also rose to 5.4 in June, the gauge's highest level since before Trump's April 2 tariff unveiling.

"Investor sentiment back to pre-Liberation Day 'Goldilocks bull' levels, but not worrying bullish," strategists wrote.

66% of surveyed investors also said they believe the global economy would avoid a recession and secure a soft landing over the next 12 months, up from 37% of investors who felt that way in BofA's April survey.