Major investors from Asia and the Middle East, including sovereign wealth funds, are increasingly reconsidering their exposure to US assets due to concerns over political volatility under the current US administration, the Financial Times reports.
Informed sources told the British newspaper that these investors are redirecting their investments toward more stable markets, avoiding the uncertainties tied to potential tariffs, trade restrictions, and policy changes in the United States.
Executives at Switzerland-based Partners Group highlighted that some investment funds are even steering clear of US markets entirely, citing the unpredictability of American economic and political decisions. The group manages assets worth over $170 billion, half of which are currently allocated in the US.
Roberto Cagnati, head of portfolio solutions at Partners Group, said an increasing number of Asian investors are focused on diversifying their portfolios away from US assets. He noted that the shift reflects broader concerns about US policy risks and potential trade disruptions.
Some investors are opting to open accounts denominated in euros rather than US dollars as a hedge against possible economic shocks. Others have requested deposit accounts with non-US banks to reduce their exposure to escalating geopolitical tensions.
Cagnati added that these discussions started earlier this year, spurred by developments under the US administration. Several sovereign wealth funds and major institutional clients are now actively seeking ways to mitigate risks associated with US markets.
He also highlighted a wider trend: the global financial system is becoming increasingly fragmented. This shift toward regional diversification and caution carries potential economic costs but is seen as necessary to protect investor interests amid rising uncertainty.
David Leighton, CEO of Partners Group, said that the perception of low stability and increased volatility is prompting investors to look for safer geographic markets. While the US remains a critical global player, investors are prioritizing stability over growth in the short term.
Wolf-Henning Scheider, head of private equity at Partners Group, warned that high US tariffs on Switzerland could hurt companies like Breitling, potentially forcing them to raise prices in the American market and reducing sales.
Nonetheless, he stressed that the US remains an attractive destination for sectors such as technology, healthcare, life sciences, industrials, and services.
Scheider concluded that despite these cautionary moves, the United States’ market size, especially in tech and healthcare, continues to draw investors.
However, ongoing economic challenges in major European economies, such as Germany, are also influencing investment strategies, prompting a careful, calculated approach to global asset allocation.
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