European investors are shifting back to US stock ETFs after favoring European stocks earlier this year. In August, EUR 5.2 billion flowed into US equity large cap blend ETFs, the largest increase since July. However, European stock ETFs also saw interest, with EUR 1.3 billion invested in August.

Initially, European investors moved away from US stock ETFs due to Trump’s trade wars, favoring European stocks. But as US stocks rebounded, European investors returned to US stock ETFs. In July, EUR 2.4 billion went into US equity large cap blend ETFs, followed by EUR 5.2 billion in August.

US stocks remain attractive due to strong fundamentals and AI opportunities. European investors are still looking at US companies for growth potential, especially in the AI sector. Despite Europe being the largest market for thematic AI funds, US companies dominate the top AI-focused portfolios globally.

European stock markets outperformed the US earlier this year but have lost momentum as US markets rally. While European stocks initially gained traction amid trade war concerns, US stocks have rebounded, leading to a shift back to US stock ETFs by European investors.

Read more at Morningstar: Is the Rotation Out of US Stocks Over?