US investors are increasingly withdrawing funds from domestic equities to diversify into foreign markets, driven by valuation concerns, relative performance, and a global rebalancing trend that signals a significant shift in investment strategies.
U.S. investors are increasingly stepping away from domestic equities, reallocating capital to overseas markets as valuations and returns at home cool and foreign markets outperform, according to market data and industry surveys.
LSEG/Lipper figures show about US$75 billion has been withdrawn from U.S.-domiciled equity funds over the past six months, with roughly $52 billion pulled since the start of 2026 , the largest outflow for the opening eight weeks of a year since at least 2010. Industry analysis notes the pattern mirrors a broader global rebalancing that gathered pace last year but is now being matched by American retail and institutional investors. According to Bank of America’s February fund manager survey, the pace of rotation into emerging-market equities is the swiftest seen in five years.
The shift stems from several pressures. After years of outperformance led by U.S. technology companies, investors are increasingly wary of stretched valuations and the concentrated risks tied to AI-related winners. The S&P 500 still trades at a steep premium to many overseas indices, roughly 21.8 times forward earnings versus about 15 times in Europe, 17 in Japan and 13.5 in China, prompting portfolio managers to hunt for cheaper opportunities abroad. “Increasingly, we are seeing U.S. investors look at the global landscape from a valuation perspective,” said Laura Cooper, global investment strategist at Nuveen.
Performance differentials have sharpened the case for diversification. Over the past year Tokyo’s Nikkei rose markedly in dollar terms, while Europe’s STOXX 600, China’s CSI 300 and South Korea’s KOSPI have all delivered stronger returns than the S&P 500. U.S. investors have channelled capital into emerging-market equity products in 2026, with flows into South Korea and Brazil among the largest, LSEG/Lipper data indicate. “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.”
Currency movements complicate the calculus. The dollar has weakened against a basket of currencies since last January, a development that raises the local cost of overseas purchases but can magnify gains in dollar terms when foreign equities outperform. Market participants say that dynamic, combined with cheaper foreign valuations, helps explain the momentum away from U.S. large caps and into more cyclically exposed and defensive sectors prevalent in markets such as Germany, the UK, Switzerland and Japan.
Flows away from U.S. stocks are not confined to domestic investors. Bloomberg reports that foreign holders sold about $63 billion of U.S. equities from March 2025 onwards, driven principally by European selling, a reversal that poses risks to U.S. market valuations given foreign investors’ sizeable ownership share. S&P Global data also point to notable net selling episodes by both institutional and retail investors, with a combined $27 billion sold in early April 2025 amid geopolitical tensions and softer technology earnings.
The reallocation is visible across investment vehicles. ETF flows in Europe showed a pronounced move into European equity UCITS ETFs in February 2025 while U.S.-focused ETF products saw outflows, according to Funds Europe. Hedge funds too trimmed U.S. equity exposure at intervals last year, with short selling and position reductions contributing to intermittent selling pressure, market commentary shows.
Whether the current pattern becomes a sustained, multi-year rotation or a cyclical reweighting remains contested. Some asset managers characterise the developments as the start of a “great global rotation” as longer-term investors chase relative value and diversification; others caution that macro shocks, policy shifts or renewed strength in U.S. growth and technology earnings could reverse flows. “If I’m taking a very long-term view, it’s, maybe, this idea of a great global rotation,” said Kevin Thozet of Carmignac.
For now, the movement of funds underscores a changing investor mindset: after more than a decade of a pronounced home-market bias, capital is increasingly being deployed with a broader geographic lens, driven by valuation gaps, relative performance and the search for opportunities beyond the megacap names that once dominated portfolios.
- https://www.atlanticcitynews.net/news/278881961/from-buy-america-to-global-bets-flows-shift – Please view link – unable to able to access data
- https://economictimes.indiatimes.com/markets/us-stocks/news/us-market-shifting-tides-global-markets-challenge-wall-streets-long-held-dominance/articleshow/128699168.cms – This article discusses the significant shift in global capital flows, with investors increasingly reallocating funds away from U.S. equities toward overseas markets. It highlights that U.S.-domiciled investors have withdrawn approximately $75 billion from domestic equity products over the past six months, including about $52 billion since the start of 2026. The trend reflects changing perceptions about valuations, growth prospects, and diversification, as investors seek better returns abroad amid concerns over U.S. market performance and policy uncertainties.
- https://www.bloomberg.com/news/articles/2025-04-25/goldman-says-foreign-investors-dumped-63-billion-in-us-equities – Bloomberg reports that foreign investors have sold $63 billion of U.S. equities since the start of March 2025. Goldman Sachs strategists note that European investors have been the primary drivers of this selling, while other regions have continued to buy U.S. stocks. This dynamic poses a substantial risk to equity valuations, as foreign investors held a record 18% ownership share of U.S. equities entering 2025.
- https://www.investing.com/news/stock-market-news/analysisfrom-buy-america-to-bye-america-wall-street-exodus-gathers-pace-4516610 – Reuters analyses the accelerating trend of U.S. investors pulling money out of their own stock market, marking the fastest pace in at least 16 years. Over the past six months, U.S.-domiciled investors have withdrawn about $75 billion from U.S. equity products, with $52 billion flowing out since the start of 2026. This shift is driven by fading returns in Big Tech and stronger performance abroad, despite a weaker dollar making overseas investments more expensive for U.S. investors.
- https://www.spglobal.com/market-intelligence/en/news-insights/articles/2025/4/institutional-retail-investors-shed-27b-in-us-stocks-in-early-april-sell-off-88521825 – S&P Global reports that institutional and retail investors offloaded a combined net of $27 billion in U.S. stocks in early April 2025. This sell-off was driven by heightened geopolitical risks from new trade tariffs and investor concerns over weaker-than-expected earnings from key technology companies. The data indicates a significant shift in investor sentiment, with many seeking safer investment options amid market uncertainties.
- https://www.investing.com/news/stock-market-news/hedge-funds-sell-us-equities-at-fastest-pace-in-three-months-says-goldman-3738937 – Investing.com reports that hedge funds significantly reduced their exposure to U.S. equities in November 2024, marking the fastest pace of net selling in three months. This reduction was driven by short sales across both single stocks and macro products, with the notional short-selling volume reaching its highest levels since September 2023. The sectors most affected included Financials, Healthcare, and Consumer Discretionary.
- https://funds-europe.com/etf-investors-shift-from-us-to-european-equities/ – Funds Europe reports that ETF investors in Europe rotated into European equities in February 2025, pulling funds from U.S. strategies amid concerns over stretched U.S. stock valuations and uncertainty around U.S. policies. Nearly €10 billion flowed into European equity Ucits ETFs during the month, while €400 million was withdrawn from U.S.-focused ETFs. This shift highlights a growing preference for European markets among investors seeking more attractive valuations and stability.
Noah Fact Check Pro
The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
8
Notes:
The article was published on 23 February 2026, making it current. However, similar narratives about U.S. investors reallocating capital overseas have appeared in recent weeks, such as reports from Reuters on 6 February 2026 and 13 February 2026, discussing U.S. equity fund inflows easing and outflows due to AI concerns and rate-cut uncertainties. ([investing.com](https://www.investing.com/news/stock-market-news/us-equity-fund-inflows-ease-as-tech-selloff-weighs-4489769?utm_source=openai)) This suggests the topic is being actively covered, but the specific data points and quotes in this article appear original.
Quotes check
Score:
7
Notes:
The article includes direct quotes from Laura Cooper, global investment strategist at Nuveen, and Gerry Fowler, UBS’s head of European equity strategy and global derivatives strategy. While these individuals are real and their positions verifiable, the specific quotes cannot be independently verified through the provided sources. This raises concerns about the authenticity of the quotes.
Source reliability
Score:
5
Notes:
The article originates from Atlantic City News, a lesser-known publication. The lack of a robust online presence and limited information about the publication’s editorial standards raise questions about its reliability. Additionally, the article cites data from LSEG/Lipper and Bank of America, which are reputable sources, but the interpretation and presentation of this data by Atlantic City News cannot be independently verified.
Plausibility check
Score:
6
Notes:
The claims about U.S. investors withdrawing approximately $75 billion from U.S. equity funds over the past six months, including $52 billion since the start of 2026, align with recent reports from Reuters on 6 February 2026 and 13 February 2026, discussing U.S. equity fund inflows easing and outflows due to AI concerns and rate-cut uncertainties. ([investing.com](https://www.investing.com/news/stock-market-news/us-equity-fund-inflows-ease-as-tech-selloff-weighs-4489769?utm_source=openai)) However, the specific figures and the narrative presented in this article cannot be fully corroborated with the available sources, raising concerns about the accuracy of the data.
Overall assessment
Verdict (FAIL, OPEN, PASS): FAIL
Confidence (LOW, MEDIUM, HIGH): MEDIUM
Summary:
The article presents a narrative about U.S. investors reallocating capital overseas, citing specific figures and quotes. While the topic is plausible and aligns with recent reports, the specific data points and quotes cannot be independently verified through the provided sources. The article originates from a lesser-known publication with limited information about its editorial standards, further raising concerns about its reliability. Given these issues, the content cannot be fully verified, leading to a FAIL verdict with MEDIUM confidence.