Ex-U.S. Equity Funds Draw $15.4B, Lifting Vanguard Emerging Markets ETF
Rotation out of U.S. tech sent global ex-U.S. equity funds to $15.4B January inflows, lifting Vanguard FTSE Emerging Markets ETF by 0.82% this week. A 1.65% drop in the U.S. Dollar Index over the past month boosts VWO’s appeal with Fed rate cut expectations.
1. Market Rotation Out of U.S. Tech
The S&P 500 slid 2.5% in early February before rallying 2% in the final session as losses in software and data services stocks prompted investors to reduce concentration in U.S. technology.
2. Inflows into Ex-U.S. Equity Funds
Global ex-U.S. equity funds recorded net inflows of $15.4 billion in January, the highest level in over four years, reflecting a shift from richly valued U.S. tech stocks to more attractively priced international markets.
3. Dollar Decline and VWO Appeal
The U.S. Dollar Index has declined 1.65% over the past month and nearly 10% over the past year, enhancing returns for emerging market ETFs like Vanguard FTSE Emerging Markets ETF in the context of potential Fed rate cuts.