Major institutional investors are accelerating capital outflows from the United States to European markets, driven by escalating anxieties over President Donald Trump's trade policies and unsustainable fiscal deficits, the Financial Times reported.
High-profile investors warn that Trump's proposal for "reciprocal tariffs" against trading partners signals excessive market concentration risks in the US. The Caisse de dépôt et placement du Québec (CDPQ), Canada's second-largest pension fund with 40% of assets in the US, confirmed plans to reduce American exposure while boosting investments in the UK, France, and Germany. The CEO of AllianceBernstein (managing US$780 billion), cautioned: With the fiscal deficit deteriorating at this pace, such borrowing is untenable. Trade policy grows increasingly unpredictable – investors must reconsider single-market overexposure.
This capital rotation toward Europe reflects eroding confidence in US stability. Blackstone Vice Chairman also noted that investors perceive European politics as comparatively stable: "We're very bullish on Europe. Shifting capital there is at least not a bad decision." Neuberger Berman's European private equity co-investments surged to 65% of total allocations this year, far exceeding the historical 20-30% range.
"Europe's macroeconomic fundamentals aren't superior, but its steadiness stands out," explained Neuberger Berman's European private equity head. "The trade war, domestic US volatility, and Trump's tax-cut bill collectively deter non-American investors."
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