Major Northern European investors are growing more cautious about exposure to U.S. assets amid rising geopolitical tensions, according to pension fund executives, signaling a widening move away from the world's largest financial market.
A top investment adviser, three pension funds and a leading industry body told Reuters the risk premium attached to holding U.S. assets had also gone up in part because of worries about the nation's finances.
Pension industry leaders and investment chiefs from Finland, Sweden and Denmark said they viewed U.S. foreign policy uncertainty and White House debt levels as a threat to the dollar, U.S. Treasuries and stocks.
The Nordic region is home to some of Europe's biggest pension funds by assets.
This week two Nordic pension funds, Sweden's Alecta and Denmark's AkademikerPension, said they had sold or were in the process of selling their U.S. Treasuries.
While they said the decisions were unrelated to recent events, U.S. President Donald Trump's ambitions for Greenland have revived speculation about Europe responding with financial protectionism to his administration's policies.
"We're having a lot of discussions (with clients) around (whether) it is time to tilt away from U.S. assets," said Van Luu, global head of solutions strategy, fixed income and foreign exchange at Russell Investments, which advises retirement schemes.
"About 50% of them are considering whether they should do something about it," especially Northern European clients, including in Scandinavia and the Netherlands, he said.
Seattle-based Russell advises clients with $1.6 trillion of assets and manages $636 billion directly.
Shifts in long-term asset allocation take time to show up and the United States with its strong economy and deep markets remains a draw.
U.S. stocks are trading near record highs. U.S. policy uncertainty, however, has pressured the dollar, which fell 10% against major currencies last year amid tariff hikes and other policies, and 30-year U.S. Treasury yields are trading at around 4.9%, near levels reached during the global financial crisis.
The Nordic funds have been more vocal about their appetite for U.S. assets than others.
Alecta said it had sold most of its U.S. bond holdings because the risk associated with U.S. Treasuries and the dollar had increased, while AkademikerPension said it would divest its holdings by the end of the month, blaming weak U.S. government finances.
AkademikerPension said the move was not intended as a political statement linked to the rift between Denmark and the United States over Greenland.
The public nature of the debate over U.S. assets is unusual for investors, who typically steer away from commenting on any changes that may be linked to current affairs.
Their long-term investment decisions tend to look past momentary events.
"All of this turmoil is raising some questions about how exposed you should be to the U.S. ... that is what our members are professionally assessing," said Tom Vile Jensen, deputy director of trade body Insurance and Pensions Denmark.
While U.S. policy uncertainty is a risk factor for asset valuations, the funds said they wouldn't withdraw capital for political reasons.
"There is certainly no weaponisation of capital. It is not the job of our sector to do that," said Vile Jensen.
The U.S. remains an investable market, but its risk premium has "continued to rise," said Annika Ekman, EVP, Investments at Finland's Ilmarinen, which manages just over 65 billion euros ($76.1 billion).
Finnish pension provider Veritas, meanwhile, is adhering to its investing mandates, but U.S. policy uncertainty is a risk for the dollar, CIO Laura Wickstrom said.
"The higher the unpredictability (goes), then that is a more difficult environment," she said.
U.S. policy uncertainty has also contributed to the draw of assets such as gold.
Folksam, one of Sweden's largest insurers, told Reuters it sold its U.S. Treasuries in 2024 partly to reduce risks ahead of the U.S. election.
"There is a lot of talk right now, but for the time being I believe one should keep a cool head," said Jonas Thulin, CIO at Sweden's AP3, which manages roughly $61 billion of pension assets.
