If you’re wondering whether the latest flows data provided more evidence for the US-to-RoW rotation narrative that’s part and parcel of the “Trump 2.0” macro-market zeitgeist, the answer’s “yes.”
Don’t let the irony be lost on you: “Trump 2.0” was supposed to be “US exceptionalism” on steroids. As of January, investors large and small were convinced that US equities would once again top the cross-asset leader board — that if you thought US dominance was extreme already, you hadn’t seen anything yet.
That all changed in late February, when Trump and JD Vance berated Volodymyr Zelensky in the Oval Office. Although Ukraine’s not a NATO member, US allies saw in that rather unfortunate spectacle a de facto reneging on America’s Article 5 commitments, which in turn compelled an epochal fiscal pivot in Berlin. Then came “Liberation Day.”
Europe-focused equity ETFs and mutual funds have seen net inflows every week save one since February. Over the latest reporting period, they took in another $4.2 billion. By contrast, US-focused funds saw another meaningful net outflow (-$9.3 billion) in the week to May 7. That’s on the heels of a $9 billion exodus the prior week.
What’s important in the figure above is the trend, not so much the totals. US equity funds are prone to chunky weekly inflows that can be orders of magnitude larger than a good week for European inflows.
Let me dwell on that for a moment. There’s a sense in which it’s apples to oranges to say, “Well, sure, European shares are seeing some interest, but the $39 billion of YTD inflows is a pittance compared to the $137 billion US shares have taken in on net so far in 2025.”
Put differently: If European funds actually catch up to US funds in terms of overall 2025 inflows, then we’ll really have a story. Apropos, the four-week rolling outflow from US-focused stock funds is nearly $25 billion. Over that same four-week stretch, European funds have seen $17 billion of inflows.
The figure below, from Nomura, uses the same EPFR data to give some (recent) historical context. There’s a sea change afoot, even as you’re encouraged to mind the double-axis.
Measured on a two-month rolling basis, inflows to US equity funds have all but flatlined ($13 billion, incorporating this week’s data). Measured using the same rolling lookback, flows to non-US equity funds total $97 billion, again including this week’s EPFR update.
Of course, documenting a nascent rotation isn’t the same thing as declaring a wholesale abandonment of US assets, equities or otherwise. There’s “very little evidence” to support the notion that investors are “dumping” US assets post-“Liberation Day,” BofA’s Michael Hartnett reiterated, in his latest.
This week, though, he added a caveat. “Foreign investors own huge” amounts of USD assets and “long-term money moves slowly,” Hartnett wrote. “Global capital is no longer exclusively chasing US assets, and just a small reallocation of US stocks” would have a “big impact.”
