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UBS Downgrades Weighting on US Equities to Neutral
Published by Global Banking & Finance Review®
Posted on February 27, 2026
2 min readLast updated: April 2, 2026
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Global Banking & Finance Review®
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Published by Global Banking & Finance Review®
Posted on February 27, 2026
2 min readLast updated: April 2, 2026
Add as preferred source on GoogleUBS cut its recommended allocation to U.S. equities to neutral, warning the market could lag if growth strengthens outside the U.S. Strategists cited relatively low U.S. earnings sensitivity to global growth, stretched valuations, investor diversification flows, and renewed downside risk to the doll
(Corrects paragraph 5 to say U.S. (not global) investors)
SINGAPORE, Feb 27 (Reuters) - UBS said on Friday it has cut its recommended allocation to U.S. equities to neutral, as the world's biggest stock market risks lagging behind while growth accelerates elsewhere.
In a note, strategists Andrew Garthwaite and Marc el Koussa cited reasons such as the relatively lower sensitivity of U.S. corporate earnings to global growth, high valuations, the trend of funds diversifying outside of the United States and downside risks to the dollar, among other things.
"The U.S. has the lowest operational leverage of any major region and thus historically underperforms if global growth accelerates to be above 3.5%," they said.
UBS forecasts global GDP to come in at 3.4% in 2026.
U.S. investors have been pulling money from the world's largest stock market, as waning Big Tech returns and chaos over domestic policymaking leaves them searching for alternatives.
Weakness in the dollar - which last year clocked its worst annual performance since 2017 - has been another push factor.
"From our marketing in North America, it seems unambiguous that funds will go global," said the strategists.
"ETF flows show diversification is happening."
Still the U.S. market is so large that even a benchmark allocation would remain a hefty one, with U.S. stocks comprising more than 70% of the MSCI World Index of global stocks.
(Reporting by Rae Wee; Editing by Jacqueline Wong and Stephen Coates)
UBS cut its recommended allocation to U.S. equities to neutral.
UBS said the U.S. has the lowest operational leverage of any major region and historically underperforms when global growth accelerates above 3.5%.
Strategists cited relatively lower sensitivity of U.S. corporate earnings to global growth, high valuations, diversification of funds outside the U.S., and downside risks to the dollar.
U.S. stocks comprise more than 70% of the MSCI World Index.
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