MW Buyers' strike by international investors for U.S. equities is over: JPMorgan

By Jules Rimmer

Foreign institutions rejoined the rally in May

U.S. stocks and bonds suffered outflows in April but inflows resumed in May, while the first quarter preference for Europe switched to Japan in the second quarter

A buyers' strike by foreign investors into U.S. stocks abruptly ended in May when institutional investors started buying into the momentum driven rally, according to analysis from JPMorgan.

Exchange-traded funds in U.S. stocks were shunned by international investors in the first four months of 2025, when ended in May.

In the note published Wednesday, JPMorgan's global quantitative strategy team emphasizes there is a distinction to be drawn, however, between foreign retail investors on one side and institutional money and hedge funds on the other. Retail investors overseas are still uninterested, it seems, in ETFs for U.S. stocks listed on international bourses, but real money investors have returned to U.S.-domiciled ETFs.

International retail investors have not recovered their appetite for U.S. ETFs listed abroad but institutional money has. Numbers in billions of dollars.

The decline in the dollar DXY , damaging returns for foreign investors, probably explains their reluctance to re-engage with U.S. stocks as enthusiastically as they did in the second half of 2024. Institutions, though, better able to deploy currency hedging strategies to protect returns, returned to U.S. listed ETF, in droves, buying $114 billion in May, the biggest net purchases since the presidential elections in Nov. 2024, the JPMorgan data.

Of this number, some $35 billion was accounted for by funds domiciled in the Caribbean, suggesting hedge fund participation.

When the JPMorgan team, led by Nikolas Panigirtzoglou, investigated to see which markets were beneficiaries of redirected cross-border flows, they found that up until the end of May European equities had absorbed $95 billion of inflows, heavily-weighted towards January and February. In the second quarter, however, this shift petered out with modest outflows from Europe and it was now Japan, attracting $44 billion in inflows that enjoyed its moment in the limelight.

The trends in fixed-income markets were not dissimilar. Like the stock market, inflows to U.S. Treasurys BX:TMUBMUSD10Y experienced a sudden reversal of $31 billion in April but then reassumed a positive trajectory. European bond markets also enjoyed a good month of fresh cash commitments in May with $109 billion but Japanese bonds BX:TMBMKJP-30Y , heavily impacted by worries about term premia risk (tying up money in long-term investments when the debt profile causes anxiety) turned mildly negative.

-Jules Rimmer

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August 07, 2025 04:47 ET (08:47 GMT)

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