Global pension funds overseeing billions of dollars have reduced exposure to US equities, as concerns mount over lofty valuations and the high concentration of AI stocks in the market. Large schemes including the Australian Retirement Trust (ART), which manages about US$260bn, Canada’s US$388bn La Caisse, and the UK’s £45bn People’s Pension are underweight global benchmarks, according to FT research.
A handful of big tech and AI-focused stocks including Nvidia, Alphabet and Microsoft have driven the S&P 500 index’s rally over the past few years, pushing US market concentration to an all-time high. Jimmy Louca, a senior portfolio manager at ART, said the scheme had reduced its position in US equities this year relative to the MSCI World benchmark, adding that valuations of the "AI sector and US equities are a little bit stretched."
Consultancy Marsh published a report that found more global institutions were planning to decrease their exposure to US equities than increase holdings. Of the 430 entities surveyed with a combined total of more than $5tn in assets under management, a third planned to reduce US equity exposure over the next 12 months — double last year’s level.
UK pension funds have also been cutting their exposure to US equities. The US now accounts for 49 per cent of the global equities exposure of People’s Pension’s main fund, compared with 53 per cent at the end of last year, far below the MSCI ACWI index’s 64 per cent.
Source: Financial Times Companies · Summarized by HeadlinesBriefing