Investor Allocations: Risk-On Rotation Accelerates

Risk-on sentiment has accelerated, with global investors rotating capital from the UK into US equities. Simultaneously, European funds are increasing cyclical exposure while identifying contrarian value in under-owned defensive sectors like Healthcare.

Key Takeaways

• 1.Global risk-on sentiment is accelerating with a clear rotation of funds into US equities at the expense of European (primarily UK) markets.
• 2.European fund positioning is rotating into cyclicals (Financials/Banks) while Healthcare remains an under-owned defensive opportunity.
• 3.The HSBC Buy-Side Sentiment Indicator (BSSI) has improved to pre-Middle East conflict levels, reflecting broad-based improvement across equity and fund flow parameters.

Table of Contents

• Risk-on momentum persists; funds rotate into US
• Funds cutting UK exposure; we see limited margin for further decline
• Europe: cyclical buying; we like Financials; Healthcare is under-owned
• Europe: stock-level fund holdings
• HSBC Buy-Side Sentiment Indicator (BSSI)
• Dev. EMEA: Q2 2026 earnings preview
• Measuring fear and greed

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