SINGAPORE/BENGALURU (Reuters) -Investors have been selling U.S. shares and piling into Asian equity funds, as the Trump administration's tariffs cast a cloud over the U.S. growth outlook and whether years of world-beating gains in U.S. markets may be drawing to an end.

Net flows into exchange-traded equity funds that invest in Asia totalled $8.45 billion for the three weeks ended May 7, the highest in about seven months, LSEG Lipper data covering 844 funds listed globally showed.

Meanwhile, U.S. equity funds logged a fourth straight week of outflows, totalling $43.5 billion to May 7, as President Donald Trump's trade policies have shaken investor confidence.

"There is more awareness of the need for portfolio diversification and the overcrowding in the Magnificent 7 stocks, helping flows to non-U.S. markets including Asia," said Prashant Bhayani, chief investment officer at BNP Paribas Wealth Management.

These outflows coincide with good performance and recent rises in currencies across Asia, suggesting a rush of money moving to the region and offering an added attraction for foreign buyers.

Valuations and a belief that countries could either strike trade deals or end up beneficiaries from new routes opened up to avoid U.S. levies are also supporting sentiment.

Gary Tan, a portfolio manager at Allspring Global Investments, has bought some stocks in ASEAN recently, which he thought were good value.

"After the initial tariff shock in April, investors have been selectively investing in market-specific ETFs in countries where they anticipate positive outcomes from tariff negotiations," he said.

MSCI's broadest index of Asia-Pacific shares outside Japan is up more than 4% for the year so far, while the S&P 500 and Nasdaq have clocked losses of close to 4% and 7%, respectively.

The one-year forward price-to-earnings (PE) ratio for Malaysia's benchmark index, for instance, stands at 17.56, with Taiwan at 14.64 and the S&P 500 at 20.62.

"We think the growing need for diversification away from U.S. assets, the dollar weakening towards its long-run fair value over time, coupled with cheaper valuations and lighter positioning, are supportive for Asian equities," said Sunil Koul, global emerging market equity strategist at Goldman Sachs.