The collapse in offshore investment support for Australia's major banks is getting worse, with only 9 per cent of global fund managers retaining exposure to the local banking sector.That is one of the key findings of analysis of the investment positioning  of 430 foreign institutional funds conducted by Copley Fund Research.While the foreign investor exodus has affected all of the Big Four banks, the impact has been greatest on ANZ. Less than 3 per cent of the fund managers assessed by Copley retain an exposure to ANZ.NAB is second least favoured by international investors, with slightly more than 3 per cent holding shares in the company.Westpac and CBA are the most favoured, but each only command interest from 5 per cent of the funds examined by Copley. "All of the four major banks have suffered, with the percentage of funds with exposure to each bank at, or close to all-time lows," said Copley CEO Steven Holden."The reduction in holdings in ANZ Banking Group has been particularly brutal."Global fund manager exposure to Australian banks peaked in 2013 when 22 per cent of foreign institutions held shares in at least one of the majors.According to Copley, the average weighting of international funds to Australian banks also peaked in that year when it accounted for close to 0.3 per cent of total portfolio assets.However, at the end of September this year the average weighting had slumped to only five basis points."It's a long term trend but we are now hitting trough levels - it has never been so low," Holden said."They're just selling down their stakes in these banks."It's a trend that's getting worse."The Copley research shows that the Australian banking market is the least favoured of global fund managers except for the United States.Holden attributes the exodus to a perfect storm of events that are eroding returns in Australian banking."Regulatory concerns, faltering housing markets and a low interest rate environment have prompted global investors to all but throw in the towel on their Australian bank investments," said Holden."Opportunities elsewhere in the Asia-Pacific region are proving more attractive, such as Singapore and India."The growth profile in India is more attractive."Holden said that most of the foreign holdings in Australian banks emanated from index managers and only a handful of active managers."Active managers are almost avoiding the Australian banks at the moment."Data sourced by Banking Day from disclosures made by fund managers in the United States indicate that a swathe of institutions have been reducing their shareholdings in the four major banks.Aberdeen Asset Investments and Mason Capital Partners are among the institutions to lighten their exposures to CBA.Big sellers of Westpac scrip have included Glenmede Investment Group, Millennium Management and The Bollard Group.The asset allocation decisions of overseas fund managers are a stark contrast to the investment strategies of local listed investment funds such as Argo and the Australian Foundation Investment Company(AFIC).These funds retain large exposures to ASX-listed banks and their future returns will hang, in large part, on dividends and share price performance