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Why Investors are Pouring Money into International ETFs

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US investors poured approximately $18 billion into international equity ETFs in January, which was the largest monthly inflow, per FT. At the same time, $10 billion was withdrawn from US-listed ETFs focused on domestic stocks, which was their second-largest monthly outflow.

After years of underperformance, international stocks have started rebounding over the past few weeks. Despite recent surge, these stocks are still much attractively priced compared to US stocks.

The mild winter in Europe has allayed fears of an energy crisis and the easing of Covid restrictions in China is benefiting many of these stocks.

The US dollar had surged last year but has seen a decline in recent weeks as the Fed is expected to slow its interest rate hikes. A weaker dollar boosts the performance of ETFs that hold foreign stocks.

The VXUS Total International Stock ETF (VXUS - Free Report) provides broad exposure to both developed and emerging non-US stock markets. Unlike major US stock indexes, which have a large tech exposure, VXUS's largest segments are the financial and industrial sectors.

Taiwan Semiconductor (TSM - Free Report) , Nestle (NSRGY - Free Report) , Tencent (TCEHY - Free Report) and ASML (ASML - Free Report) are its top holdings.

To learn more about the VXUS and the iShares Core MSCI Total International Stock ETF (IXUS - Free Report) , please watch the short video above.


 

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