Global investors reassess US assets as debt concerns grow

Growing worries over US government debt, elevated borrowing costs and geopolitical uncertainty are prompting major global investors and central banks to reconsider how much of their wealth they keep in US-linked assets.

Norway’s sovereign wealth fund is preparing to reduce its exposure to US government bonds as part of a broader restructuring of its fixed-income portfolio, while the Dutch central bank has relocated a sizeable quantity of its gold from North America to London.

The decisions do not indicate a sudden flight from US markets, but they underline a gradual effort among major institutions to diversify their holdings and reduce concentration risks.

Norway’s Government Pension Fund Global, the world’s largest sovereign wealth fund, plans to cut the proportion of government securities in its bond benchmark from 70% to 50%. The change would give the fund greater flexibility to invest in other types of fixed-income assets while retaining sufficient liquidity during periods of market turbulence.

As part of the proposed adjustment, the fund’s allocation to US Treasury securities would decline from 34.1% to 21.9% of its government-bond holdings. Its exposure to euro-area government debt would also be reduced.

The proposed shift comes as yields on longer-term US Treasury securities have climbed amid growing investor concern about the country’s expanding debt burden and the amount of new borrowing required to finance government spending.

Economist Mohamed El-Erian described Norway’s planned reduction as relatively modest in terms of its direct impact on the Treasury market, but said the decision was important because of what it signals about the behaviour of traditional US debt buyers.

He pointed to China, Japan and Gulf countries as major holders whose future appetite for US government bonds could be affected by geopolitical developments or domestic economic pressures.

Norway’s fund is not simply moving away from US assets. It is also planning to increase its exposure to non-government US fixed-income investments, including corporate debt, as part of its diversification strategy.

The fund’s proposed allocation to such assets would rise from 16.2% to 27.6%. Officials have highlighted mortgage-backed securities as one area that could offer additional returns while behaving differently from equities during periods of market stress.

The fund currently has about $1.65 trillion invested in equities and roughly $592 billion in fixed-income assets. Its strong recent performance has been supported in part by investments in technology and artificial-intelligence companies, although officials have cautioned against assuming that these gains will continue indefinitely.

A stress test conducted by the fund found that a sharp correction in AI-related investments could potentially erase about $740 billion, equivalent to 35% of its value.

The broader bond market is also facing pressure. El-Erian said yields could remain elevated as governments struggle to bring borrowing under control, particularly in countries where there is limited political willingness to pursue immediate fiscal consolidation.

He identified Britain, Japan and France as economies that could be particularly exposed to continued pressure on sovereign debt markets.

Meanwhile, the Dutch central bank has taken steps to make its gold reserves more readily accessible in times of crisis.

The institution moved about 86 metric tons of gold from storage facilities in New York and Ottawa to London between March and August. The transfer represented more than a quarter of the gold it had previously stored in North America.

The gold is now held with the Bank of England. Dutch officials said London’s established bullion market provides greater liquidity and makes it easier to trade or mobilise the reserves if required.

The relocation was also described as part of efforts to strengthen crisis preparedness and spread the country’s gold holdings across different locations.

Following the transfer, 32.1% of the Netherlands’ gold reserves are held in London, while 30.8% remains at the central bank’s facility in Zeist. New York and Ottawa each account for 18.5%.

France has taken a similar step, transferring 129 metric tons of gold from the New York Federal Reserve between July 2025 and January 2026. French officials have said that move was not politically driven.

The changes are taking place against a backdrop of strong demand for gold, whose price has risen substantially over the past year amid financial and geopolitical uncertainty.