Despite the rising rates and strengthening U.S. dollar, Americans are looking at international markets and related ETFs.

Specifically, more investors are looking at developed markets like Europe and Japan. While the disparity between rising U.S. interest rates and negative rates out of the European Central Bank and Bank of Japan widens, traders are utilizing currency forwards to hedge out foreign-exchange risk, reports Mike Bird for the Wall Street Journal.

“If you look at a U.S.-based investor, they actually get a significant yield pickup going into Japan and Europe—it’s very interesting from a flow perspective,” Jamie Fahy, global macro strategist at Citigroup, told the WSJ, adding that the boost to returns could be one reason that European equity markets are outperforming the U.S. so far this year.

For instance, the iShares MSCI Japan ETF (NYSEArca: EWJ)  is up 0.5% and iShares MSCI EMU ETF (NYSEArca: EZU) is 2.1% higher year-to-date, while the S&P 500 is 0.8% lower.

U.S. investors have funneled $78 billion into Japanese and eurozone equity mutual funds and exchange-traded funds in the past year, according EPFR data. Meanwhile, Eurozone and Japanese investors pulled $160.8 billion more than they invested from U.S. equity funds over the same period.

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