International ETFs Are Finally Turning Heads

After years of enjoying the outperformance in U.S. equities, investors are finally looking into international stock ETFs and opportunities to diversify away from a relatively pricey U.S. market.

“What I see is an interesting trend,” David Mazza, Head of ETF Investment Strategy – Beta Solutions for OppenheimerFunds, said at the Inside ETFs 2018 conference. “More money actually moved into international equity ETF versus U.S. for the first time in a while there.”

ETF investors have begun shifting away for overweight U.S. equity market exposure as the extended bull market pushed up valuations in domestic stocks. On the other hand, after years of underperforming the U.S., international markets are looking much more attractive and they are being supported by strengthening corporate earnings and growing economies.

“Last year, people finally saw a catalyst to diversify with improving economies outside the U.S. and relatively attractive valuations, and the money followed,” Mazza added.