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A range of hypotheses has circulated regarding the cause of this outflow trend. Some investors seem to be pulling money from U.S. equities and reallocating it towards international markets, possibly due to fluctuating performances in the domestic market. For example, on the same day as the SCD outflow, Vanguard's Developed Markets ETF recorded a substantial inflow, reflecting a shift in investor sentiment.
However, analysts suggest that the primary driver of the SCD outflow may relate to the fund's annual reconstitution process, which occurs each March. This is when the ETF updates its holdings, endeavoring to reflect the best investment picks based on Schwab's criteria. The latest reconstitution saw SCD evaluate which companies within its portfolio would be cut and which would be added.