Latest ETF Flows Show the ‘TACO’ Trade in Action
From Yahoo Finance: 2025-06-13 08:00:00
Recent ETF flows show the U.S.-to-Europe rotation is slowing, hinting at the “TACO” trade theory. European investors put $3.3 billion into U.S. equities, surpassing U.S. equivalents. Data suggests a shift back to U.S. stocks despite predictions of a rotation out of U.S. equities in favor of Europe.
In early 2025, U.S. exceptionalism trade peaked before reversing. Despite expectations for continued U.S. dominance, recent data shows a shift back to U.S. stocks. Investors are hesitant to abandon U.S. exceptionalism completely, reflecting uncertainty in the market due to Trump’s policies.
Trade tensions between China and the U.S. influenced the ETF market in May, leading investors back to U.S. stocks. European investors question the upside potential of European stocks after a strong year. Fidelity International’s head of ETF distribution, Stefan Kuhn, highlights the impact of trade disputes on ETF flows.
The recent shift in ETF flows indicates the “TACO” trade theory in action, suggesting a lack of confidence in Trump’s policy stance. European investors are reevaluating their positions after a strong performance. The market remains uncertain amidst trade tensions and economic growth concerns.