Growing Demand for International Stock ETFs

Investors and financial advisors are increasingly turning to exchange traded funds to satiate their hunger for international market exposure.

According to the Investment Company Institute, investors have pulled a net $198 billion from domestic stock funds since 2010 and funneled $1 trillion into international stock funds, reports John Waggoner for InvestmentNews.

Of the $3.8 trillion in both international ETFs and mutual funds, $863 billion is in international ETFs, which leaves a lot of more room for ETFs to catch up to the mutual fund market. In the 12 months ended January, around $279 billion flowed into international stock funds, with $185 billion going into ETFs and $94 billion heading toward mutual funds.

The rising influx of cash into international stock funds has been fueled by financial advisors, and the pace of flows is only likely to quicken ahead. According to a recent InvestmentNews survey of advisors, only 12% of financial advisors expect to increase allocations to U.S. equities this year, compared to 45% planning on raising allocations to international equities.

Furthermore, advisors revealed they have an average 31% of client assets in ETFs, and 29% of respondents plan to add more to that in the area of international equity in 2018, with 27% specifically singling out emerging markets.