Americans Are Pulling Money Out of U.S. Stocks at a Record Pace. Here's Where It's Going.

Something significant is happening in global investing that most people haven't noticed yet. American investors, who have overwhelmingly kept their money in U.S. stocks for the past 15 years, are now pulling out at the fastest pace in at least 16 years and sending that money overseas. In the first eight weeks of 2026 alone, $52 billion has flowed out of U.S. equity products, the most for that period since at least 2010, according to data from LSEG/Lipper. Over the past six months, the total outflow from U.S. stocks is roughly $75 billion.

To understand why this is happening, and why it matters, you need to understand the era it's reversing.

The "Buy America" Era (And Why It Dominated)

Since the 2008 financial crisis, the U.S. stock market has been the best place on earth to put your money. The S&P 500 gained about 234% between 2016 and 2025 alone. International stocks including Europe, Japan, emerging markets have trailed badly. There was even a phrase for it: "U.S. exceptionalism." American companies, led by Big Tech, kept growing faster, earning more, and attracting more capital than anyone else. Investors who diversified internationally were often rewarded with worse returns.

That created a self-reinforcing cycle. Capital flowed into the U.S., pushing prices higher. Higher prices attracted more capital. The Magnificent Seven (Apple, Microsoft, Alphabet, Amazon, Meta, Nvidia, and Tesla) grew so large that they eventually made up about a third of the entire S&P 500's value.

What Changed in 2025 and 2026

The cracks appeared in 2025. International markets staged a dramatic comeback. Non-U.S. stocks returned roughly 30% for the year, outpacing the S&P 500 by double digits. In dollar terms: Tokyo's Nikkei gained 43%, Europe's STOXX 600 surged 26%, and Seoul's KOSPI doubled. The U.S. had a good year too (S&P 500 up about 16%), but it was no longer the clear winner.

In 2026, the gap has widened further. The Magnificent Seven are down roughly 6% year-to-date, with Microsoft falling about 20% and Amazon dropping around 11%. Investors are increasingly skeptical that the massive amounts of money these companies are spending on AI, a combined ~$600 billion expected in 2026, will translate into returns quickly enough to justify historically high stock prices. Meanwhile, many international markets are up this year.

Where Is the Money Going?

European stocks are the biggest beneficiary. European banking stocks surged 67% last year and are up another 4% so far in 2026. The continent is benefiting from a shift away from austerity toward growth spending, particularly on defense infrastructure, and central bank rate cuts. Germany, in particular, is undertaking a major fiscal expansion.

Emerging markets are also seeing significant inflows. American investors have poured about $26 billion into emerging-market equities so far in 2026, with South Korea the top destination ($2.8 billion), followed by Brazil ($1.2 billion). Bank of America's February fund manager survey found that investors switched from U.S. equities to emerging-market equities at the fastest rate in five years.

Japan is another major destination. Corporate governance reforms have unlocked value at many Japanese companies, and the Nikkei has outperformed U.S. markets significantly over the past 18 months.

The Dollar Dynamic

One interesting wrinkle: this shift is happening even though it's become more expensive for U.S. investors to buy international assets. The dollar has weakened about 10% since last January, which normally makes overseas investments pricier for Americans in dollar terms. The fact that money is still flowing out despite that headwind is a strong signal of how much conviction is behind the rotation.

There's also a flip side benefit. A weaker dollar actually boosts the dollar-denominated returns that international companies generate. If a German company earns profits in euros, and those euros buy more dollars than they used to, U.S. investors holding that stock benefit even before stock price moves. As one UBS strategist put it: investors are looking at the performance of foreign markets in dollar terms and saying "wow, I'm missing out."

Is This a Permanent Shift?

It's too early to call this permanent, and plenty of strategists still favor U.S. stocks as a core holding. The U.S. economy remains the world's largest, the dollar is still the global reserve currency (for now), and American companies dominate the highest-growth sectors. Wells Fargo Investment Institute, for instance, still puts the U.S. first and international second in its 2026 outlook.

But the "buy America at all costs" mentality that dominated the past decade does appear to be softening. After 15 years of underperformance, international markets are attractively valued relative to their U.S. counterparts. And with Big Tech's growth story getting more complicated, the case for keeping nearly all your eggs in the U.S. basket is weaker than it used to be.

For investors with a diversified retirement account or 401(k), this is worth paying attention to. Most target-date funds and index funds already include some international exposure. If yours doesn't, or if you're very U.S.-heavy, this might be a natural moment to revisit that allocation and make sure it aligns with your goals and risk profile.

Sources: Reuters, LSEG/Lipper, Bank of America Fund Manager Survey, Fidelity, Morningstar, CNBC, Charles Schwab, Wells Fargo Investment Institute