Industry Updates

European investors accelerate US stock allocation in 2024

US investors may feel they are fully allocated to domestic exposures

Lauren Gibbons

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European investors are more readily including US stocks within their portfolios versus US-based investors so far in 2024.

According to data from Bloomberg Intelligence, 48% of all regional flows into US equities came from Europe, sitting in stark contrast to 38% from US investors.

This is equivalent to $7.4bn inflows from European investors so far this year, double that of US investors which have poured just $3.7bn.

With the S&P 500 reaching 5,000 points for the first time last week, US investors believe they are fully allocated to national exposures while overseas buyers are more likely to be playing catch up, according to Bloomberg Intelligence.

Compounding this was the notion that 80% of US ETF assets are already made up of domestic exposures.

Additionally, data from Amundi shows US equity strategies remained among the most popular strategies for European investors, attracting inflows of €6.8bn last month.

Supporting Europe’s huge portion of flows were three S&P 500 ETFs, with the iShares Core S&P 500 UCITS ETF attracting $2.6bn of inflows last month, the SPDR S&P 500 UCITS ETF pulling in $922m of inflows and the Vanguard S&P 500 UCITS ETF posting impressive inflows of $620m.

Pushing Europe to second place for US stock allocation was Canada, which had 51% of its country's flows going into US stocks.

Another point to consider in the US equity story is concentration risks driving assets towards equal-weight S&P 500 ETFs.

As the ‘magnificent seven’ comprised all gains made by the S&P 500 in the first five months of 2023, European investors are being much more selective of how they are gaining exposure to US equities, prompting the US-listed Invesco S&P 500 Equal Weight ETF (RSP) to book its biggest week of inflows since its inception, adding $1.7bn assets.

Furthermore, the Xtrackers S&P 500 Equal Weight UCITS ETF (XDEW) saw $2bn inflows in 2023 amid investor concerns over potential overconcentration risks.

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