Fund managers are flocking to these 12 stocks despite rising tariff and stagflation risks

• Portfolio managers' positioning doesn't seem to suggest that danger is imminent.
• Bank of America analyzed hundreds of funds and came to surprising conclusions.
• Here are 12 stocks that managers seem to be getting excited about.

Money managers seem to be betting that the market's biggest fears are overblown.

Professional investors aren't bracing for stagflation, a trade war between the US and Europe, or damaging cuts by DOGE, according to Bank of America. That's based on the firm's recently published analysis of around 370 large-cap mutual funds with a combined $2.6 trillion in assets.

Judging by how mutual funds are positioned, managers also don't seem to be banking on a Russia-Ukraine ceasefire or a major recovery for manufacturing, BofA's early April report said.

If economic growth levels off and inflation picks up, managers may want to gravitate toward sectors like utilities, consumer staples, and energy, which have historically performed best in stagflationary settings, according to BofA.

But managers are underexposed to all three of these groups, even though more than 70% of respondents to BofA's fund manager survey have said that they're prepared to see stagflation.

Those running mutual funds are also leaning into US stocks with the most sales exposure to Europe, despite seemingly rising tensions in global trade. European equities are also red hot, as BofA said they received some of the largest passive inflows ever in the first quarter of 2025.

Other notable investment decisions are within industrials, where there's a near-record allocation to US defense stocks and otherwise light positioning, especially in machinery. That seems to suggest that the US will continue to support Ukraine, even as government spending is under the microscope as the national debt load looms. Otherwise, investors aren't thrilled about the sector.

Although some of these seemingly contrarian calls may be headscratching, fund managers may be going against the grain for a reason.

Active funds broadly have consistently trailed their benchmarks, as BofA previously reported that just 30% outperformed last year. After record inflows into passive funds in 2024 that have continued this year, it makes sense that money managers are taking some risks to get an edge.

12 stocks that pros increasingly love

While fund managers are trying to set themselves apart, they also have some similar ideas.

Bank of America highlighted 50 stocks in the S&P 500 that mutual fund managers have been disproportionately "crowding" into, as measured by growth in relative weight in the last month. Of these increasingly popular names, 12 saw their relative weights rise by at least 0.1 points.

Below are those dozen companies that money managers are betting on most aggressively now. Curiously, only a few of the stocks are in sectors that perform best when there's stagflation.

Along with each is its ticker, sector, annual sector performance during stagflation, one-month change in relative weight, and one-month change in ownership percentage by long-only funds.

1. Lululemon

Ticker: LULU

Sector: Consumer Discretionary

Sector annual performance during stagflation: -16%

One-month change in relative weight: 0.22 points

One-month change in ownership percentage: 1.7%

2. Jacobs

Ticker: J

Sector: Industrials

Sector annual performance during stagflation: -11.4%

One-month change in relative weight: 0.22 points

One-month change in ownership percentage: 0.3%

3. Allstate

Ticker: ALL

Sector: Financials

Sector annual performance during stagflation: -1.8%

One-month change in relative weight: 0.19 points

One-month change in ownership percentage: -0.5%

4. Seagate Technology

Ticker: STX

Sector: Information Technology

Sector annual performance during stagflation: -16.9%

One-month change in relative weight: 0.16 points

One-month change in ownership percentage: 0%

5. APA Corp.

Ticker: APA

Sector: Energy

Sector annual performance during stagflation: 2.3%

One-month change in relative weight: 0.15 points

One-month change in ownership percentage: -0.3%

6. Walgreens Boots Alliance

Ticker: WBA

Sector: Consumer Staples

Sector annual performance during stagflation: 6.2%

One-month change in relative weight: 0.12 points

One-month change in ownership percentage: 0.6%

7. CDW

Ticker: CDW

Sector: Information Technology

Sector annual performance during stagflation: -16.9%

One-month change in relative weight: 0.12 points

One-month change in ownership percentage: 0%

8. Delta Air Lines

Ticker: DAL

Sector: Industrials

Sector annual performance during stagflation: -11.4%

One-month change in relative weight: 0.11 points

One-month change in ownership percentage: 2.5%

9. Expedia

Ticker: EXPE

Sector: Consumer Discretionary

Sector annual performance during stagflation: -16%

One-month change in relative weight: 0.11 points

One-month change in ownership percentage: 1.7%

10. Capital One Financial

Ticker: COF

Sector: Financials

Sector annual performance during stagflation: -1.8%

One-month change in relative weight: 0.11 points

One-month change in ownership percentage: 0.9%

11. CBRE Group

Ticker: CBRE

Sector: Real Estate

Sector annual performance during stagflation: 0.9%

One-month change in relative weight: 0.1 points

One-month change in ownership percentage: 1.1%

12. Paramount Global

Ticker: PARA

Sector: Communication Services

Sector annual performance during stagflation: -1.3%

One-month change in relative weight: 0.1 points

One-month change in ownership percentage: 0%

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