U.S. investors poured a record $10.6 billion into exchange-traded funds focused on European stocks in the first quarter, seven times the inflows recorded a year earlier, according to data from BlackRock (BLK.N), opens new tab.

As U.S. President Donald Trump's tariffs and economic policies fuel uncertainty across markets, European equities have emerged as a bright spot. Tim Seymour, founder and chief investment officer of Seymour Asset Management, dubbed the burgeoning trend Make Europe Great Again, or MEGA.

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The resurgent interest in European ETFs reflects a sharp reversal in sentiment. Since Russia's invasion of Ukraine in February 2022, the funds had seen net outflows of $6.4 billion.

"It's a really massive swing," said Kristy Akullian, head of iShares Investment Strategy at BlackRock.

In three of the last five calendar years, investors steered money out of European ETFs that trade in U.S. markets and into domestic funds, especially dominant technology stocks like Nvidia (NVDA.O), opens new tab, whose valuations remain elevated.

"It's not that anyone is going to dump all their U.S. stocks, but they're rediscovering international stocks, and Europe in particular, for the first time in more than a decade," said Seymour, who is also a portfolio manager of the Amplify International Enhanced Dividend ETF (IDVO.P), opens new tab.

The breakout for Europe is different from others in recent years, he added.

"Europe is deregulating at a faster clip than the U.S. is, the German fiscal announcements were historic," Seymour said, citing the massive spending plans of Friedrich Merz, leader of Germany's conservatives and its likely future chancellor.

BlackRock's Akullian said the iShares MSCI Germany ETF (EWG.P), opens new tab has seen more than $1 billion of net inflows so far this year, doubling the fund's total assets under management. That marked a record for the 29-year-old ETF, she said.

Defense stocks in particular have drawn investor interest this year, given calls by European leaders for boosting their militaries. The Select STOXX Europe Aerospace & Defense ETF (EUAD.Z), opens new tab has attracted $469 million in assets this year, bringing total assets to $476 million, after it launched last October.

There is quite a bit of genuine enthusiasm around what's happening in Europe," said Ronald Temple, chief market strategist for Lazard's financial advisory and asset management businesses. U.S. policy moves may have "jolted Europe out of its paralysis", he said.

"For this to be more than just a tactical trade, we need to see follow-through, for earnings growth in Europe to really pick up," said Akullian.

Not all European countries are benefiting from the optimism. ETFs that invest in British stocks, such as the iShares MSCI United Kingdom (EWU.P), opens new tab, continue to see net outflows. (Reuters)

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