U.S. investors are increasingly reallocating capital away from domestic equities and toward overseas markets after a period in which "buy America" dominated global flows. New flow data compiled by LSEG/Lipper show that in the past six months U.S.-domiciled investors withdrew about $75 billion from U.S. equity products, with $52 billion of that outflow recorded since the beginning of 2026. The pace of U.S. withdrawals in the first eight weeks of this year is the fastest the data set has registered since at least 2010.
This reorientation has emerged even as the dollar has weakened versus other currencies - a dynamic that typically makes foreign assets pricier for U.S.-based buyers. Nonetheless, the trend indicates that diversification moves away from U.S. equities among international investors over the past year are now being mirrored at home.
Since the end of the global financial crisis, the U.S. equity market provided outsized returns thanks to a resilient economy, strong earnings growth and dominant technology companies. The recent artificial intelligence-driven run further propelled the S&P 500 to record highs last year, creating a performance buffer against policy and geopolitical uncertainties tied to President Donald Trump’s trade stance and efforts to challenge Federal Reserve independence.
But the appeal of Wall Street-listed names has cooled for a range of reasons. Investors are re-evaluating the sustainability of the parabolic gains in a handful of megacap technology companies and the attendant valuation risk. At the same time, other markets have delivered substantially stronger returns over the trailing 12 months: Tokyo’s Nikkei rose about 43% in dollar terms, Europe’s STOXX 600 climbed roughly 26%, Shanghai’s CSI 300 returned 23%, and Seoul’s KOSPI doubled in value. By comparison, the S&P 500 has risen around 14% over the same period.
Those relative returns are one clear driver of the shift. Bank of America’s February fund manager survey noted that professional investors reallocated from U.S. equities into emerging-market equities at the fastest rate in five years. Broker and wealth-manager conversations support that observation. "I’ve had lots of conversations with our wealth business in the U.S. this year," said Gerry Fowler, UBS’s head of European equity strategy and global derivatives strategy. "They’re all talking about investing more offshore because at the end of the year, they looked at the performance of foreign markets in dollars and they’re like, wow, I’m missing out."
Flow data show active movement into markets beyond the United States. Year-to-date, U.S. investors have put about $26 billion into emerging-market equities, with South Korea the largest single-country recipient at $2.8 billion, followed by Brazil with $1.2 billion, according to LSEG/Lipper. At the same time, flows into European equity products have accelerated - LSEG/Lipper reports nearly $7 billion moving into European equity funds since President Trump’s inauguration in January last year, a reversal from an approximate $17 billion outflow recorded during his first term from 2017 to 2021.
Currency shifts are another relevant factor. The dollar has weakened roughly 10% against a basket of currencies since last January. That depreciation raises the nominal cost for U.S. investors buying foreign assets, but it also inflates the dollar value of dividends and returns earned in stronger-performing overseas markets when converted back into dollars.
Investors are also searching for sectors that offer more attractive valuation profiles than the high-flying U.S. technology stocks. The rally in AI-focused firms such as Nvidia, Meta and Microsoft has prompted questions about sustainability and valuation risk, and some investors are responding by increasing allocations to value and cyclical sectors. Laura Cooper, global investment strategist at Nuveen, described the shift as a global extension of the Wall Street rotation away from growth and into value. "Increasingly we are seeing U.S. investors look at the global landscape from a valuation perspective," she said, highlighting cyclical growth opportunities particularly in Europe and Japan.
European banking stocks provide an example of such cyclical exposure; they surged about 67% last year and have gained an additional roughly 4% so far in 2026. Valuation spreads between U.S. stocks and those abroad remain significant: the S&P 500 trades at about 21.8 times forward earnings, while European equities trade near 15 times forward earnings, Japan around 17 times and China approximately 13.5 times.
Portfolio managers have taken note. Kevin Thozet, a portfolio adviser at Carmignac, said his team observed accelerating flows of U.S. capital into European markets beginning roughly mid-2025. "If I’m taking a very long-term view, it’s, maybe, this idea of a great global rotation," he said.
In practice, the movement away from the United States manifests in two interlinked behaviours: the trimming of positions in richly priced tech and growth names and the redeployment of proceeds into overseas equity markets that have recently outperformed in dollar terms and offer comparatively lower forward valuations. The result is a re-pricing of regional allocations among U.S. investors who had previously benefited from a long period of U.S. equity dominance.
While the data show pronounced flows and the commentary from strategists and portfolio managers highlights shifting sentiment, the longer-term durability of these reallocations will depend on how global returns, currency moves and sector-level performance evolve over time.
Data sources cited: LSEG/Lipper; Bank of America fund manager survey; statements from UBS, Nuveen, and Carmignac representatives as cited above.