economy
The wealthiest investors are pulling money out of the U.S. in the 'de-dollarization' trade
Fears of an AI bubble, tariffs, a falling dollar, volatile economic policies and rising debt have caused many family offices to dial back their U.S. exposure
TL;DR
- 60% of family offices plan strategic investment allocation changes in the next year, double the rate of the past five years.
- Many are reducing U.S. holdings and increasing investments in emerging markets, Latin America, and Africa.
- Key concerns driving these changes include geopolitical tensions, global debt, interest rates, AI bubble fears, tariffs, a falling dollar, volatile economic policies, and rising debt yields.
- The strategy of 'jurisdictional diversification' involves spreading money across multiple countries to hedge risk.
- Two-thirds of family offices have bankable assets in at least three jurisdictions; nearly a third have them in at least four.
- Over a quarter of family offices plan to lower their holdings of U.S. dollar-denominated assets, with many expecting confidence in the dollar's reserve role to fall.
- The Swiss franc and euro are preferred currencies for diversification.
- Geopolitical uncertainty is identified as the top risk for the next 12 months and five years, followed by global trade war.
- Family offices plan to increase emerging market equities, infrastructure, and gold investments, while slightly reducing cash and real estate.
- A divergence exists between U.S. and non-U.S. family offices: U.S. offices are increasing domestic asset concentration, while international offices are diversifying out of the U.S. dollar and U.S. markets.