New data from Global X has revealed that local investors have poured approximately $2.3 billion into Australian-listed exchange-traded funds (ETF), providing exposure to the US market since Donald Trump’s election.
This marks the largest three-month net inflow into these ETFs on record, surpassing the previous high of $1.2 billion set in October 2024.
In stark contrast, following Trump’s 2016 election, just $50 million flowed into Australian-listed US equity ETFs, a reflection of a more cautious, risk-averse market response as investors assessed the potential impact of his presidency.
Global X senior investment strategist Billy Leung explained that investors are now far more eager to gain exposure to US equities, particularly following the market’s best two-year run to 31 December 2024 in a quarter of a century.
“It essentially comes down to the Trump administration and its policies,” Leung said.
A key factor contributing to this shift, Leung noted, is the President’s ambitious tariff proposals, which are widely seen as positive for the US dollar, prompting greater investor confidence in US exposure.
Speaking to Ausbiz on Thursday, Leung expressed continued optimism about US markets, stressing the growing case for staying positioned in the US.
“We’re still very positive on the US market,” Leung said.
“The US economic growth is still looking at between 1.8 per cent and 2.0 per cent for the next few years. And this economic growth on a real adjusted basis is still higher than the average of the G7 or the average of the developed markets. So there is still an argument to be positioned in the US,” he added.
But, Leung explained, Global X does anticipate broader market growth, with diversification tipped to occur outside of the select US large capitalisations that have been dominant for much of 2024.
In particular, Leung highlighted the potential of smaller US companies, which are expected to thrive in a pro-growth, deregulated environment, further supported by the benefits of a lower interest rate landscape.
“We believe that there is going to be incremental or increasing support from the ex-large caps, or even what we can describe as the SMID, or small to mid-caps,” he said, adding that small to mid-caps offer greater tactical resilience, particularly amid global supply chain challenges which are expected to follow tariff announcements and rising geopolitical instability.
Touching on Global X’s recent launch of the Russell 2000 ETF, which provides exposure to 2,000 small-cap stocks listed in the US, Leung said: “One of the key reasons this index tends to outperform during these times is its broad sectoral exposure.”
The Russell 2000 has significant exposure to sectors like healthcare, financials and industrials, which are more responsive to domestic pro-growth policies and lower interest rates.
“This allows investors to diversify away from the mega-cap tilt that dominates the broader market,” Leung added.
In 2024, global share ETFs were the standout performer, drawing over $16 billion in net flows and accounting for over half of ETF flows. US equities led the way, with US equity products attracting a record $5 billion in net flows, doubling the previous high set in 2021.
