An analysis of global pension fund and insurer filings reveals that major holders of US assets have minimal protection against a weakening dollar. As of June 30, investors in key markets including Japan, Canada, and Taiwan hedged only 41% of their foreign-currency exposure, marking the lowest level since at least 2015. This data suggests that the heightened hedging activity seen last year, driven by former President Donald Trump's global tariff rollout, has diminished as the US currency stabilized. While the current snapshot does not represent the entire global market, it offers critical insight into prevailing sentiment and the potential risk of steeper currency declines if market sentiment shifts abruptly.

The findings highlight a significant vulnerability for institutional investors who are heavily exposed to dollar-denominated assets without adequate hedging strategies. With hedging ratios at multi-year lows, the currency faces increased risk should risk appetite deteriorate. Market observers will likely monitor upcoming quarterly filings to determine if this trend of reduced protection persists or if investors return to more defensive positioning.