Global Investors Pivot Toward Non-U.S. Markets Amid Valuation and Policy Concerns

In a significant shift of sentiment this July, global equity funds excluding those based in the United States drew in a remarkable $13.6 billion—the largest monthly inflow seen in more than four and a half years. Meanwhile, U.S.-focused equity vehicles continued to lose ground, registering $6.3 billion in outflows and marking a three-month downward trend.
Investors appear to be redirecting capital toward markets overseas, enticed by comparatively attractive valuations and more supportive monetary conditions abroad. With the U.S. still grappling with elevated equity price-to-earnings ratios, roughly 22.6 on a forward basis, Asia (ex-Japan) and Europe offer more appealing alternatives—trading at forward P/E ratios nearer 14.4 and 14.2 respectively.
This shift is also influenced by growing unease over U.S. economic policy, including unpredictable trade measures and currency fluctuations. The weakening dollar has further enhanced returns from global markets, particularly for U.S.-based investors.
Performance data underlines the reallocation: MSCI indices representing Asia Pacific (ex-Japan) and European equities have surged approximately 14% and over 19% year-to-date—vastly outperforming the U.S. benchmark's 7.2% gain. Yet some analysts caution that the trend may reflect a strategic rebalancing rather than a wholesale migration away from U.S. assets, particularly as valuation gaps—and underlying fundamentals—warrant reevaluation.