European Fund Manager Survey: Peace returns, but inflation persists

Research evidence excerpt

European Fund Manager Survey: Peace returns, but inflation persists

constructive over next year PaulinaQuant StrategistStrzelinska >>

A net 4% of investors expect downside for European equities over the coming months, MLI+44 (UK)20 7996 7059

the most bearish reading since September 2024. However, a net 71% project upside for paulina.strzelinska@bofa.com

the market over the coming year, up from 58% last month, with a record net 93% seeing

upside for European 12-month forward EPS, driven by top-line growth and cost

discipline. Nonetheless, the rotation out of Europe continues, with a net 15% reporting

Notes to readersbeing underweight European equities, compared to a net 35% that said they were

An overall total of 198 panellists withoverweight before the war. 68% think US growth and earnings superiority means that

$540bn AUM participated in the survey.Europe’s structural underperformance will continue, up from 30% in February.

172 participants with $465bn AUM

Pessimistic on cyclicals, with pharma back in favour responded to the global FMS questions

A net 25% of respondents see downside for European cyclicals relative to defensives, and 99 participants with $270bn AUM

the most negative stance since December 2023. Utilities no longer rank as the largest responded to the regional FMS

sector overweight in Europe, overtaken by pharma, with banks and tech now second and questions.

third. Pharma is also seen as the most undervalued sector, while tech is deemed the Survey period: 5th Jun 2026 to 11th Jun

most overvalued. Cyclicals dominate the underweights, with autos, media and retail the 2026.

least favoured sectors. Germany is the most preferred country, while France is the least

liked. How to join the FMS panel

Investors/clients are encouraged to