Active, growth- and earnings-focused fund managers are increasingly skeptical of
the US equity rally. Deutsche Bank's compilation shows active investors' equity
allocations have fallen to the lower third of their historical range, citing
elevated US Treasury yields, the Iran war and persistent inflation. At the same
time, major indices have risen and volatility has eased, prompting
systematic/quant funds to keep buying and remain overweight US equities. The
resulting active underweight versus systematic overweight gap is the
second-largest since 2020. Deutsche Bank strategist Parag Thatte said: "This
divergence has little room to widen further, so one side will likely give ground
soon."
