US investors poured a record $11 billion into European ETFs to "make Europe great again"

American investors poured a record $10.6 billion into exchange-traded funds (ETFs) focused on European stocks in the first quarter, seven times the inflow recorded a year earlier, according to BlackRock data, UNN writes, citing Reuters.

Details

As US President Donald Trump's tariffs and economic policies fuel uncertainty in the markets, European stocks have become a bright spot. Tim Seymour, founder and chief investment officer of Seymour Asset Management, called the growing trend "Make Europe Great Again" or MEGA.

The renewed interest in European ETFs reflects a sharp reversal in sentiment. Following Russia's invasion of Ukraine in February 2022, net outflows from the funds totaled $6.4 billion.

"This is a really huge jump," said Christi Akullian, head of investment strategy for iShares at BlackRock.

For three of the past five calendar years, investors have been withdrawing money from European ETFs traded in US markets into domestic funds, especially dominant technology stocks such as Nvidia, whose valuations remain high.

"It's not that anyone is going to dump all their US stocks, but they are rediscovering international stocks, and especially European ones, for the first time in more than a decade," said Seymour, who is also a portfolio manager at Amplify International Enhanced Dividend ETF.

He added that the breakthrough in Europe is different from others in recent years.

"Europe is deregulating its economy faster than the US, German fiscal statements have been historic," Seymour said, referring to the massive spending plans of Friedrich Merz, leader of the German conservatives and likely future chancellor.

Akullian of BlackRock said that the iShares MSCI Germany ETF has received over $1 billion in net inflows this year, doubling the fund's total assets under management. This is a record for the 29-year-old ETF, she said.

Shares of defense companies have been particularly attractive to investors this year, given calls from European leaders to strengthen their armed forces. The Select STOXX Europe Aerospace & Defense ETF has attracted $469 million in assets this year, bringing total assets to $476 million after launching last October.

"There is genuine enthusiasm in Europe," said Ronald Temple, chief market strategist at financial consulting and asset management firm Lazard. According to him, US political moves may have "taken Europe out of paralysis."

Some warned that the rally could fizzle.

"For this to be more than just a tactical deal, we need to see a continuation for earnings growth in Europe to really accelerate," Akullian said.

Not all European countries are benefiting from the optimism. ETFs investing in UK stocks, such as the iShares MSCI United Kingdom, continue to see net outflows.

Ukrainian eurobonds fell to a 4-month low - Bloomberg31.03.25, 15:59 • 22101 view