Long-only investment pools moved decisively toward non-U.S. equity markets in February, according to a research note from Bank of America. The bank's quant strategist Nigel Tupper highlighted the regional shift succinctly, writing that "long-only funds globally bought non-US stocks but sold US stocks."
BofA's data combine flows across both active and passive vehicles. Emerging Markets attracted the largest net inflows, with purchases exceeding $17.6 billion, followed by Asia Pacific, which drew more than $14.9 billion in net buying. By contrast, the United States registered the largest net outflows, where funds sold $69.5 billion of shares.
The rotation had a clear sector footprint. Consumer Staples recorded the strongest buy activity at over $7.9 billion, while Materials saw more than $5 billion of net purchases. Heavy selling occurred in Software and Media, where long-only funds offloaded roughly $17.7 billion and $11 billion, respectively.
At the individual-stock level, BofA identified the largest long-only purchases in February as Walmart, AbbVie, Roche and ASML. Major reductions in long-only exposure included AstraZeneca, Microsoft, Apple and NVIDIA.
The note also listed the most widely held stocks by long-only funds worldwide. TSMC topped that list with 92 percent ownership, followed by ARM at 88 percent, Microsoft at 84 percent, NVIDIA at 74 percent and Tencent at 72 percent.
BofA further observed that names classified as "Crowded Positives" - equities that combine high ownership with positive "Triple Momentum" signals - continued to outperform. Examples cited in this group include Broadcom, TSMC, Samsung Electronics, Micron Technology, SK Hynix and Eli Lilly.
In a separate valuation-oriented callout contained with the research, the research note posed the question: "Is MSFT a bargain right now?" and referenced a Fair Value calculator that uses a mix of 17 industry valuation models to assess stocks. That callout was presented as a tool to evaluate Microsoft alongside other names.
Key takeaways
- Regional shift - Long-only funds increased exposure to Emerging Markets and Asia Pacific while reducing U.S. holdings.
- Sector rotation - Consumer Staples and Materials saw the strongest buying; Software and Media experienced the largest selling.
- Concentration and momentum - Several highly owned names remain dominant in long-only portfolios, and so-called "Crowded Positives" continued to lead performance.
Contextual risks and uncertainties
- U.S. outflows - Large net selling in U.S. equities could exert downward pressure on U.S.-focused sectors and portfolios with heavy domestic exposure.
- Concentration risk - High ownership percentages in a small set of names raise the risk that adverse moves in those stocks may have outsized effects on long-only portfolios.
- Sector-specific headwinds - Significant selling in Software and Media suggests potential near-term weakness for those sectors relative to the buyers in Consumer Staples and Materials.