Why are global ex-U.S. equity funds seeing record inflows?

Global ex-U.S. equity funds attracted significant inflows as investors moved away from high-valuation U.S. technology stocks towards more diversified and lower-valued international markets.

What factors are driving investors to markets outside the U.S.?

U.S. macroeconomic risks, a weakening U.S. dollar, and the perceived attractiveness of international markets offering growth and yield potential are driving this investment shift.

How has the performance of ex-U.S. markets compared to the U.S. recently?

The MSCI World ex USA Index has outperformed the S&P 500 year-to-date, indicating stronger recent performance in markets outside the United States.

Home / Business and Economy / Global Stocks Soar as Investors Shun U.S. Tech

Global Stocks Soar as Investors Shun U.S. Tech

5 Feb

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Summary

Global ex-U.S. equity funds attracted $15.4 billion in January.
U.S. macro risks and a weaker dollar drive foreign investment.
Ex-U.S. markets offer lower valuations and cyclical stock exposure.

Global Stocks Soar as Investors Shun U.S. Tech

Global equity funds excluding those focused on the United States experienced substantial inflows totaling $15.4 billion in January, marking a four-and-a-half-year high. This surge in investment reflects a strategic shift by investors moving away from predominantly U.S. technology stocks, which currently face pressure due to the rising costs associated with artificial intelligence investments.

The rotation into international markets is propelled by several factors, including perceived U.S. macroeconomic risks and a declining U.S. dollar. Analysts point to attractive opportunities in ex-U.S. markets, citing China's growth and yield potential, and Europe's anticipated benefits from increased defense and fiscal spending. These markets also present a more favorable valuation landscape compared to the U.S.

The MSCI World ex USA Index has demonstrated stronger performance year-to-date, outperforming the S&P 500. Experts anticipate global equities could rise by approximately 10% by year-end, suggesting that investors holding concentrated U.S. positions stand to benefit from diversification. The persistence of favorable currency dynamics and interest rate expectations further supports the view that this market rotation could have lasting impact.