---
title: "Wall Street \"reduces holdings in the U.S.\": Over $50 billion flowed into international ETFs in January, shifting towards China, Japan, and Europe"
description: "Data from Morningstar Direct shows that in January, investors had a net inflow of $51.6 billion into international stock ETFs, marking a significant increase in monthly inflows since the end of 2024. "
type: "news"
locale: "en"
url: "https://longbridge.com/en/news/275419729.md"
published_at: "2026-02-10T07:46:21.000Z"
---

# Wall Street "reduces holdings in the U.S.": Over $50 billion flowed into international ETFs in January, shifting towards China, Japan, and Europe

> Data from Morningstar Direct shows that in January, investors had a net inflow of $51.6 billion into international stock ETFs, marking a significant increase in monthly inflows since the end of 2024. However, this round of capital outflow is different from last spring's "de-risking from the U.S." trade. Analysts believe that we are now in a global bull market, and this is no longer just a story about the United States

After years of heavily investing in large U.S. tech stocks, Wall Street investors are accelerating the shift of funds to international markets. This change is driven by high valuations in the U.S. stock market, a weakening dollar, and new opportunities in overseas markets, as investors bet that the U.S. market's lead will narrow.

Data on capital flows shows that this trend is gaining momentum. According to a report by The Wall Street Journal on Monday, Morningstar Direct data indicates that **in January, investors saw a net inflow of $51.6 billion into international stock ETFs, with monthly inflows significantly rising since the end of 2024.**

Several global indices have outperformed major U.S. benchmark indices this year, including the STOXX Europe 600 Index, the Korea Composite Index, and the MSCI Emerging Markets Index. Last year, the MSCI All Country World Index ex USA surged 29% in U.S. dollar terms, marking its best performance in over a decade, far exceeding the S&P 500's 16% increase.

This round of capital outflow differs from last spring's "reduce U.S. exposure" trade. Most asset managers still believe that the U.S. will lead the global stock market rally, but the extent of that lead may not be as significant as in recent years.

## Valuation and Dollar Driving Capital Outflow

High valuations and dollar depreciation have become the core factors driving capital flows overseas. The dollar has fallen about 10% from its peak in 2022, enhancing the return potential of foreign stocks by increasing the relative earnings value of foreign companies compared to U.S. companies.

Keith Lerner, Chief Investment Officer at Truist Advisory Services, stated, "We are now in a global bull market; it's no longer just a U.S. story."

Alex Guiliano, Chief Investment Officer at Resonate Wealth Partners in New Jersey, has increased allocations to European and Japanese stocks this year, partly attracted by lower valuations. **"It feels like we have reached a turning point," he said, "the international markets seem to have many winning ways."**

Michael Rosen, Chief Investment Officer at Angeles Investments, has concentrated his portfolio on the largest U.S. tech stocks for most of the past decade, **but over the past year he has shifted funds toward global small-cap and value stocks, focusing on Europe and China. "For us, this is a very significant shift," Rosen said.**

## Catalysts Emerge in Overseas Markets

Investor optimism has been boosted by several developments overseas, from fiscal stimulus in Japan to a surge in military spending in Europe. On Monday, Japan's Nikkei 225 Index hit a new high after Prime Minister Fumio Kishida's victory in the temporary parliamentary elections.

Some traders are simply looking for better trading opportunities than the high-priced domestic stocks. Others hope to diversify away from the domestically dominated major indices led by a few tech giants.

Don Calcagni, Chief Investment Officer at Mercer Advisors, stated that while he still believes the U.S. is "exceptional," he has concerns about the future of the U.S. market, including the ever-expanding national debt and the political and economic volatility brought by President Trump "There is some strong evidence suggesting - not necessarily a reduction in U.S. holdings - but rather a rebalancing of allocations outside the U.S., adopting a more balanced approach," he said.

## Difference from the "Reducing U.S. Holdings" Trade

Asset managers quickly reminded that the recent wave of foreign stock purchases is not a second part of last spring's "reducing U.S. holdings" trade. At that time, global investors sold off U.S. stocks, government bonds, and other dollar-denominated assets, with the dollar plummeting during tariff turmoil.

Calcagni cited the double-digit annual gain of the S&P 500 index last year, saying: **"If the reducing U.S. holdings trade could give me a 16% return, I would keep doing it. We still think the U.S. is outstanding."**

Despite the recent downturn in tech stocks impacting the market, the U.S. stock market still reached new highs last week, with the Dow Jones Industrial Average surpassing the 50,000-point mark for the first time.

Investors have also been rotating among domestic stock market leaders for some time. After the U.S. stock market achieved astonishing returns for three consecutive years - primarily driven by the AI investment boom - traders began looking elsewhere for the next wave of gains. Foreign stocks are not the only beneficiaries: small-cap stocks and blue-chip stocks have also outperformed major benchmark indices in recent weeks.

Calcagni stated that investors' focus on the U.S. market is expanding. "Many of our clients are now asking us why they don't hold more foreign company stocks," he said, "investors may have found a new faith in international diversification."

### Related Stocks

- [03153.HK - CSOP NIKKEI225](https://longbridge.com/en/quote/03153.HK.md)
- [IEUR.US - ishares Core Msci Europe](https://longbridge.com/en/quote/IEUR.US.md)
- [1546.JP - Nomura Holdings, Inc.](https://longbridge.com/en/quote/1546.JP.md)
- [IEV.US - ISHRS S&P Eu 350](https://longbridge.com/en/quote/IEV.US.md)
- [513520.CN - ChinaAMC Nomura N225 ETF(QDII)](https://longbridge.com/en/quote/513520.CN.md)
- [513880.CN - Huaan MUFG N225 ETF(QDII)](https://longbridge.com/en/quote/513880.CN.md)
- [EWJ.US - ISHRS MSCI Japan](https://longbridge.com/en/quote/EWJ.US.md)

## Related News & Research

| Title | Description | URL |
|-------|-------------|-----|
| Halo 交易的终极赢家，是日本？ | 在 AI 革命加速的背景下，重资产、低淘汰率（Halo）企业的投资策略正在主导市场，日本股市有望成为赢家。分析指出，曾被冷落的日本企业因其独特的工业底蕴和技术壁垒，成为全球投资者的避风港。摩根士丹利认为，资金正从轻资产转向重资产，以对冲 A | [Link](https://longbridge.com/en/news/277008463.md) |
| 日本出生率连续第十年下降，人口危机愈演愈烈！ | 2025 年日本新生儿数量同比下降 2.1%，降至约 70.6 万人。同期，日本死亡人数小幅下降 0.8%，至约 160 万人。尽管首相高市早苗提出税收减免、生育补贴等措施，但政策尚未落地，引发外界对人口危机重视程度的质疑。政府政策重心或已 | [Link](https://longbridge.com/en/news/277004213.md) |
| 本周，“AI 颠覆一切” 的狼终于来了 | 市场对 AI 颠覆风险的认知加速上升，摩根士丹利最新研报指出，MSCI 欧洲指数中面临 AI 颠覆风险的权重已从 4% 升至 24%。随着 AI 模型能力的突破，投资者需重新审视资产配置，关注公用事业、半导体等防御性行业。报告强调，未来的价 | [Link](https://longbridge.com/en/news/275973130.md) |
| 日股狂欢难掩债汇风波，“高市交易” 究竟是机会还是陷阱？ | 日本股市在 “高市交易” 推动下创历史新高（日经 225 本周涨 5%），但债市与汇市平静背后暗藏 “高市陷阱”：若高市早苗大幅支出以兑现承诺，可能削弱日元、加剧通胀，最终反噬股市。尽管她承诺减税不涉及新债，但分析师质疑兑现能力。 | [Link](https://longbridge.com/en/news/276004435.md) |
| Bybit EU 在欧洲经济区发起 “更大回报，更短持有” 宣传活动 | Bybit EU 在欧洲经济区推出了一项限时活动，名为 “更高回报，更短持有”，为符合条件的净充值提供 3% 的年化收益率（APY），持有期为 180 天。该活动从 2026 年 2 月 25 日持续到 3 月 31 日，用户无需注册单独的 | [Link](https://longbridge.com/en/news/277078124.md) |

---

> **Disclaimer**: This article is for reference only and does not constitute any investment advice.