Funds flow into international ETFS VXUS AVEM

Billions of dollars are investing in ETFs of international and emerging market companies as U.S. markets swing and investors struggle to downgrade, trade wars and inflation concerns.

The largest former US International Exchange-traded fund, $90.5 billion Pioneer International Stock ETF (VXU)recently achieved an impressive feat: it has not seen a day's outflow in the past 52 weeks. During this period, it earned $11.7 billion. VXU has inflows of $1.5 billion in the past month, with the last day of outflows being February 2023.

In some cases, investors also snap up emerging market ETFs. This $9.7 billion Avantis Emerging Market Equity ETF (AVEM) In the past month, it has increased by $1.1 billion.

Investors bid for international ETFs this year because some believe that the Trump administration’s tariff war will force overseas companies to build domestic industries, such as defense. VXU has risen 14% this year, while 1.8% growth rate is 1.8% Vanguard S&P 500 ETF (VOO). Nevertheless, VOO has jumped 13% in the past month, up 8.8% from Vxus.

AVEM's 10% return this year also outpaced VOO's return, while its 1-month return is 11% Trail table of Big S&P 500 fund. ETF.com research head Kent Thune said investors may attract the potential of ETF valuations, with an average portfolio price/income ratio of 10.2.

"Under the AVEM's hood, the low-average portfolio P/E is very attractive compared to the S&P 500's valuation, which is more than twice that," Thune said. Investors also attracted the highest holdings of the fund, including Taiwan Semiconductor Manufacturing Corporation (TSM), Alibaba Group Holdings Corporation (BABA) and Tencent Holdings (TCEHY), he said.

VXUS Network Fund Traffic

VXUS NET Fund Traffic - Source: Fact Set

Still, VXU may still see its position as a “workhorse” international ETF and include it in Vanguard’s robotics consultant and model portfolio solutions, said Daniel Sotiroff, senior manager research analyst at Morningstar Direct Direct Direct.

He added that while VXU and AVEM outperformed VOO, mutual funds and ETF streams remain favorable for U.S. investment. He said that in April, the inflow of mutual funds and ETFs of mutual funds and ETFs was lower than typical in foreign and large mixed classes, while the outflow of overall emerging market ETFs and mutual funds was $3.6 billion.