For many years foreign ownership of US-listed shares has closely tracked the US’s growing financial obligations to the rest of the world. In simple terms, as the US (in aggregate) spent beyond its means, global investors funded this shortfall, accumulating more and more US assets. However, shifting dynamics are causing global investors to rethink their US exposure, with adverse implications for the dollar and US equity markets, and a reset of global asset prices.
A large share of this money comes from sovereign wealth funds, pension funds and insurance companies. These are long-term investors with strategic asset allocations that they regularly rebalance. Despite the fact that most of their future obligations are in their home currencies, 50%–60% of their US exposure is not hedged back into those currencies.
So far, this structure has worked exceptionally well — largely because it has rested on three powerful foundations: As long as these three conditions hold, the party can go on. But it is evident that all three factors are becoming less reliable. Outside a small group of dominant companies, profitability is no longer clearly superior to the rest of the world.
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At the same time, political uncertainty — particularly under a second Trump presidency — raises questions about policy stability and the long-assumed security of foreign capital. Meanwhile, traditional relationships between US shares, bonds and the dollar are starting to break down. Assets that once moved in predictable ways are no longer doing so.
While US returns over 2025 were strong in dollars, they have been far less compelling in euros, pounds and even rand. It is likely that large global investors are starting to reassess how their portfolios are built. That could mean reviewing how much currency risk they are willing to carry — and whether the size of their long-term allocations to US assets still make sense. If that shift begins, it could reinforce a weaker dollar and softer US equity markets while strengthening new patterns in global asset prices.
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