Athlete Investors Reconsider US Assets Amid Global Shift

KEY POINTS

• Institutional investors, including major pension funds, are increasingly selling US dollar assets in favor of European markets due to concerns over erratic US policymaking and trade tensions.

• The US dollar has weakened significantly this year, driving a shift towards non-dollar assets like German government bonds and the euro, with European-domiciled ETFs witnessing record outflows from US assets.

• Even athlete investors are beginning to join this global shift, exploring European markets and other alternatives to protect their wealth amidst rising uncertainty in the US financial landscape.

👉 Bonus: Below you will find five ChatGPT prompts that you can use to develop your expertise in this area.

As the global financial landscape shifts, athletes should also reconsider their exposure to US dollar assets. For years, elite athletes turned investors, from NBA legends to international football icons, have been drawn to the lucrative US market, parking millions in American stocks, bonds, and real estate. But now they, too, are beginning to join a broader wave of institutional investors pulling back from US assets, seeking safer and potentially more rewarding opportunities in Europe.

This move is not merely a reaction to market volatility. The trend, highlighted in a recent Financial Times article, marks the start of what could become a long-term shift in capital allocation—a move with far-reaching consequences for the global economy. It is a strategic shift driven by growing concerns over erratic US policymaking, the fallout from trade tensions, and the weakening of the US dollar.

As global pension funds, sovereign wealth funds, and investment giants begin to trim their US positions, athlete investors are following suit. For these sports icons—who have built personal fortunes through a mix of salaries, endorsements, and savvy investments—protecting their wealth and responding appropriately to market changes should always be a top priority.

This cautious approach reflects a broader trend. As the dollar slides and European markets attract fresh capital, the era of unquestioned US dominance in global capital flows may be coming to an end. For athlete investors and institutional giants alike, the question now is where to place their bets in an increasingly unpredictable world.

A Slow but Inevitable Shift

For decades, US markets have been a magnet for global capital. Institutional investors, from pension funds to insurance companies, have poured billions into US equities and bonds, lured by the country’s strong economic growth, robust corporate earnings, and the unparalleled liquidity of its markets. But this long-standing trend is beginning to reverse.

According to Wall Street banks, which oversee trillions in global assets, many of these large investors are quietly trimming their US positions. The reasons are multifaceted: erratic policymaking, the fallout from ongoing trade disputes, and most notably, recent attacks on the Federal Reserve by former US President Donald Trump. While US equities have largely recovered from the recent shocks triggered by Trump’s “liberation day” tariffs, they remain in negative territory for the year, underperforming global peers. The US dollar itself has dropped more than 7% this year, with some analysts warning of potential “capital flight” to safer, non-dollar assets such as German government bonds.

Luca Paolini, chief strategist at Pictet Asset Management, captured the mood of these investors succinctly: “It is happening. It will be slow but inevitable.” Luca highlighted that the combination of cheaper equity valuations and strong catalysts for European economic growth, including a German-led defense spending boom, has made Europe “the most logical” destination for reallocating funds.

Capital Outflows Confirm the Trend

The numbers tell the story clearly. A recent Bank of America survey found that investors executed their largest ever cut to US equity allocations in March.

Inflows have lifted European stocks this year

In the same period, the shift into European markets was the sharpest since 1999. European-domiciled exchange-traded funds (ETFs) targeting US debt and stocks witnessed outflows of €2.5 billion in April—the highest level since early 2023, according to Morningstar Direct. This pattern has continued into May, with further outflows from equity ETFs, although fixed-income ETFs have seen some recovery.

Kenneth Lamont, principal at Morningstar, described this trend as a “reversal of a long-term trend in which US assets have been the beneficiary of consistently strong net inflows.” Kenneth noted that European investors are increasingly turning to domestic sectors, such as defense, driven by a sense of “patriotic” capital allocation.

In currency markets, the shift is equally clear. The euro has surged in recent weeks, alongside a rally in German government bonds, as investors seek refuge from dollar volatility. Deutsche Bank and Bank of America have reported significant selling of US dollars by institutional investors, confirming a growing preference for non-dollar assets.

Institutional Investors Speak Out

The list of investors rethinking their US exposure is growing. Veritas Pension Insurance Company, a major Finnish pension fund, reduced its US equity exposure in the first quarter of 2025. Laura Wickström, Veritas’ chief investment officer, cited high US valuations and uncertainty around trade policies as key factors behind the decision.

Australia’s A$149 billion UniSuper pension scheme is also reevaluating its US investments. John Pearce, the fund’s chief investment officer, suggested that the global peak of US asset investments may have already passed. “Frankly, I think we’ve seen peak investment in US assets,” he stated on a recent podcast.

Even US-based funds are beginning to question their heavy domestic focus. Scott Chan, chief investment officer of California’s $350 billion State Teachers’ Retirement System, warned that tariffs and trade tensions could drive foreign investors to sell US assets, posing risks for American markets.

The Dollar’s Double-Edged Sword

The US dollar’s decline this year has been particularly painful for foreign investors who held dollar-denominated assets without hedging against currency risk. As the greenback weakens, the value of these holdings shrinks in euro or yen terms. According to Bank of America, if European investors were to restore their currency hedges to pre-pandemic levels, they could end up hedging as much as $2.5 trillion of dollar exposure—a move that would likely put even more pressure on the dollar.

Yet the shift away from US assets is not a stampede—at least, not yet. Investors remain cautious, mindful of the risks of betting against the US market’s long history of strong performance. “We are having an internal debate on US exceptionalism [and] whether we reduce US allocations,” one investor told the Financial Times. “Experience says that you need to be careful with these shifts and that betting against the US hasn’t worked out well.”

Why the US May Not Be Easily Replaced

Despite the clear signs of a shift, there are limits to how far this trend can go. The US stock market remains the world’s deepest and most liquid, while the US Treasury market, with nearly $30 trillion in outstanding bonds, remains the global benchmark for safe-haven assets. Even as some funds cut US exposure, others may see value in buying US assets at lower prices, betting on a future recovery.

But the psychological shift is real. As John Butler, a rates strategist at Wellington Management, put it: “If the globalization of capital goes in reverse, the question becomes how far and fast it does so.” For now, Europe appears to be the main beneficiary of this change, attracting fresh capital from disillusioned investors.

5 PROMPTS THAT ATHLETES CAN USE TO DEVELOP AND BUILD EXPERTISE

• Explain the main reasons why institutional investors are selling US dollar assets and shifting to European markets, and how this trend could impact my investment strategy as an athlete investor.

• Identify the key risks and opportunities for athlete investors when diversifying away from US assets into European equities and bonds, and suggest strategies to mitigate currency risk.

• As an athlete investor, how can I effectively monitor global capital flows and identify the best non-US assets or markets for diversification in a shifting economic environment?

• Provide a comparison of the historical performance of US and European markets over the past decade, and explain why Europe is now seen as a safer destination for large investors.

• Outline a diversified investment strategy for athlete investors that balances US and European assets while managing risks associated with currency fluctuations and global market volatility.

👉 Check out ChampionsChat GPT for your prompts. Also, feel free to test Athlete Wealth Pro when it comes to investing.

What’s Next for Athlete Investors?

The consequences of this trend could be profound. A sustained shift away from US dollar assets would weaken the dollar’s status as the world’s primary reserve currency. It could also force US policymakers to grapple with the impact of reduced foreign demand for American equities and government bonds.

For athlete investors, the global shift away from US assets is a wake-up call. Yet, the move is not without risks. While European markets offer stability and growth potential, they also come with regulatory challenges and a more fragmented capital market. Betting against the US—still the world’s largest and most liquid market—can be a double-edged sword: You don’t just leave the game that made you rich without a plan. Diversifying is smart, but you can’t afford to ignore America.

As global capital flows begin to shift, the coming years could see a major reordering of the global financial landscape. The rebalancing of global capital is a test for athlete investors, many of whom have transformed from high-earning professionals to sophisticated market players. Whether they can successfully navigate this new era of global finance will depend on their ability to balance ambition with caution, leveraging their unique networks while staying grounded in solid investment principles.

👇

I really appreciate you reading my note today.

Happy Sunday,

Irg

Irg’s work is provided for informational purposes only and should not be construed as legal, business, investment, or tax advice. You should always do your own research and consult advisors on these subjects. This work may feature assets and entities in which the author has invested.

🙏 Thanks for reading Irg's Athletes in Business Notes! Subscribe for free to receive new notes and support my work.

© 2025 Athletes in Business Notes by Patparius GmbH