Investing.com -- The long standing theme of US exceptionalism in equities is showing signs of fatigue, according to Nomura, as global investors increasingly redirect capital toward Europe and emerging markets.

High-frequency ETF data reflects a meaningful moderation in inflows into US-focused offshore-listed equity funds.

Over the past 20 weeks, such funds have seen net outflows in 11 weeks, amounting to $4.7 billion, marking a significant shift after drawing an estimated $160 billion between mid-2023 and early 2025.

While US equities have hit new highs, the data shows foreign appetite is softening.

Europe-focused offshore ETFs posted net inflows in 21 of the past 24 weeks, totaling around $15 billion, while emerging market ETFs attracted $13.6 billion over the last 23 weeks.

The pickup in EM inflows has been particularly notable since late January, coinciding with the slowdown in US equity demand.

The fading of US exceptionalism, a narrative that has been there on portfolio allocations globally for years, has been discussed widely since early 2025, as per Nomura.

While the US dollar has weakened and demand for US Treasuries remains tepid, the rebound in equities has raised questions over whether foreign investors were returning. But flow data suggests otherwise.

Asian markets present a mixed picture. Korean offshore-listed ETFs saw $1.4 billion of inflows in the past six weeks, likely driven by AI exposure and governance reform hopes.

India ETFs have drawn $1.8 billion since late March after a stretch of outflows. Taiwan and Japan are drawing capital directly via equities, not ETFs.

In contrast, China- and Hong Kong-focused ETFs continue to see net selling, as investor interest wanes outside of brief periods linked to state-backed buying.