From Yahoo Finance: 2025-06-11 08:57:00

Global investors are shifting money from U.S. equities to European and emerging markets, concerned about U.S. fiscal policy and trade tariffs. U.S. equity funds saw outflows of $24.7 billion in May, while European funds attracted $21 billion. Emerging market equity ETFs saw $3.6 billion in inflows last month.

European markets are outperforming U.S. peers due to lower interest rates and optimism over Germany’s stimulus plan. The European Central Bank cut rates, warning of rising trade risks with the U.S. Analysts attribute the shift to Europe to valuations and changing investor sentiment, marking a potential medium-term trend.

Since the start of the year, MSCI U.S. index gained 2.7%, MSCI Europe rose about 20%, and MSCI Asia Pacific is up 10%. Emerging market equity funds are attracting money flows due to improving fundamentals, with Asian economies driven by domestic consumption. Asian equities are seen as better positioned due to lower debt and stronger growth compared to Europe. The forward 12-month price-to-earnings ratio for MSCI U.S. is higher than Europe and Asia Pacific.

Read more: Investors pull out of US stocks and into Europe and emerging markets