Since October, the S&P 500 has rallied over 20% — and now, other global stock markets are starting to come along for the ride. According to Bank of America’s March fund manager survey, institutional investors are piling into Eurozone and emerging markets (EM) stocks in pursuit of cheaper alternatives to US equities.

• Investors increased their Eurozone and EM exposure by over 20% month-over-month — while investors grew their Japan exposure by 10%.
• With a 23x price-to-earnings (P/E) ratio, the S&P 500 trades higher than popular emerging markets (13.5x) and developed markets (14.6x) exchange-traded funds.

Wake-up call: Since the pandemic, Eurozone and EM stocks, which have underperformed compared to American equities, have been less popular. Even today, investors hold fewer global stocks than they have historically, leaving plenty of room for investors to fill. In the BofA survey, investors say they’re willing to take risks — which could benefit Chinese stocks, Europe’s Magnificent 7, and even Japan, which is experiencing post-negative interest rates.