ETF investors examine international exposure amid US volatility

Yahoo

15-05-2025

The S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) have erased year-to-date losses as investors reexamine their portfolio allocations to US equities. AllianceBernstein global head of ETF strategy and partnerships Julie Gunts joins Catalysts with Julie Hyman and Great Hill Capital chairman and managing member Thomas Hayes to take a closer look at flows in the ETF space.
To watch more expert insights and analysis on the latest market action, check out more Catalysts here.
The S&P 500 and NASDAQ have erased their year-to-date losses as investors flock to US equities in the wake of a pause in steep tariffs between the US and China. Our next guest is ETF flows into international stocks at $7.4 billion. They're holding up even in the face of the US rally. Let's bring in Julie Guns, Alliance Bernstein, global head of ETF strategy and partnerships, for this week's ETF report brought to you by Invesco QQQ. Thanks for being here, Julie, appreciate it. Thanks for having me.
So, we've talked a lot about this sort of balance between international and US, just generally in assets, but how's it played out through the lens of ETFs?
Sure, so, over, you know, there's been a lot of volatility over the past few weeks. And I think, you know, April, even within, you know, this week, we've seen inflows into international ETFs. And so, you know, US still dominates. US large cap has been been the biggest flows, but I think people are are looking to international, both from a valuation perspective and and performance, and also to diversify their portfolios. Um, as, you know, trade and tariff risk, you know, has been muted for the time being, but I think we'll still be out there, um, as the year progresses.
Yeah, it's it seems like international, you you want two things in play. Number one is a weaker dollar, so that's helped. I think, uh, XUS relative to the US is out performance of some 15, 16% year to date. So now people, this was a big theme for us coming into this year. How do you see that playing out in coming years? Because if you look at, you know, zoom out and look at the long-term data, these run in normal 10 to 15 year cycles. And we've had this zero interest rate policy, so large cap tech is outperformed last post Great Financial Crisis. That's over. We're we're in kind of a normalized interest rate environment. So do you see that as a favorable environment for the next handful of years for international relative to the US, or are you still keen US equities?
I mean, I I think there's a place for both in portfolios. Um, I think international, you know, has the opportunity especially with, you know, if larger tariffs come into place, you know, maybe there's more of a a home bias in in European countries or other places throughout the world. Um, and so, you know, clients and and investors should probably diversify and have access to both, um, depending on how things play out.
Uh, I want to ask about the active ETF landscape, which has been a big trend over the past few years. It's still a small little sliver of the overall ETF market, but it's been growing. Um, why are people so interested in it? And and where how big do you think that part is going to get?
Yeah, I mean, active ETF flows, we've seen $380 billion net flows into ETFs this year in the US. And active ETFs have been 40% of those flows. So only 10% of the market, but 40% of the money in motion. And I think the benefits are you take these traditional active investments that were in maybe mutual fund rappers or or different things, and you give them the benefits of the ETF. So, you know, transparency, liquidity, um, intraday trading. And so you get the best of both worlds of active management and the ETF wrapper. And so I I think that trend will continue and and we'll continue to see the growth in in active ETFs.
Julie, thanks so much for coming in. Appreciate it. Thanks.