Trade disruption and heightened geopolitical uncertainty are driving asset owners to rethink their portfolio allocations, reducing U.S. exposure as a result of dollar volatility, tariffs and regulatory uncertainty, according to Morningstar’s quantitative analysis of its 2025 Voice of the Asset Owner Survey.
Approximately 40% of surveyed asset owners reported decreasing or planning to decrease their allocations to U.S. investments, while 26% of respondents said they increased theirs. In total, 76% of global asset owners viewed trade disputes as a material consideration to their investments—a figure that stood at 94% for asset owners in China.
Canadian and U.K. asset owners were most likely to reduce their U.S. investments, at 62% and 55% of respondents, respectively. Investors in the Asia Pacific region were less likely to sell U.S. assets and were most likely to be buyers, while European asset owners were most likely to be sellers of their U.S. investments and were least likely to have increased their allocations to U.S. assets.
The issues most material to asset owners’ investment decisions also included currency volatility and weakness in the dollar (64%), the evolving generative artificial intelligence landscape (61%), supply chain threats (59%) and high levels of fiscal debt (45%).
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“This year’s survey was fielded during a period of heightened geopolitical uncertainty,” Morningstar’s report stated. “Insights from our qualitative interviews revealed that asset owners are increasingly focused on distinguishing short-term noise from material investment considerations that have long term impact.”
Morningstar surveyed more than 500 asset owners who collectively manage $19.1 trillion in assets. Survey respondents included outsourced CIOs (22%), family offices (19%), insurers (18%), pension funds (17%), endowments and foundations (12%), charitable and religious foundations (11%) and some representatives of sovereign wealth funds.
Approximately 203 respondents were located in Europe, 200 in Asia Pacific and 103 in North America. Asset owners managing at least $1 billion accounted for 62% of respondents, while 29% managed at least $10 billion.
The survey also probed asset owners’ views on stewardship and collective engagement; environmental, social and governance issues; and the adoption of artificial intelligence. According to the survey, 69% of all asset owner respondents said ESG is still a relevant term, with 44% of respondents’ assets under management taking ESG into account. The strongest motivators asset owners reported to adopt ESG in their investment processes included stakeholder pressure from policy holders and plan participants, ethical and moral principles, and fiduciary responsibilities and requirements.
The biggest hurdles to pursuing an ESG investment strategy, according to Morningstar, included ESG factors’ impact on returns, the lack of standardized data and difficulty reporting.
Asset owners see AI technology as most useful to their investment operations by providing easier access to relevant information and data, ensuring improved data quality, and enhancing scenario analysis and forecasting.
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Tags: Morningstar
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