European pension funds reduce their holdings of US Treasuries to a total of 7.7 billion, raising concerns over institutional risk escalation

Against the backdrop of increasingly complex global macroeconomic conditions, major European institutional investors are re-evaluating their US asset allocation strategies. Over the past year, concerns over the uncertainty of the US fiscal situation and the continuous rise in federal debt have attracted widespread attention from international investors, and this attention is translating into tangible adjustments in investment decisions.

Alecta Significantly Reduces US Treasury Holdings, Reflecting Structural Concerns

According to recent reports, Sweden’s largest pension fund Alecta has liquidated US Treasury positions worth between $7.7 billion and $8.8 billion since early 2025. This substantial sale not only demonstrates the fund’s cautious stance towards the current US fiscal situation but also reflects deep considerations by large European institutions regarding long-term risks.

From Alecta’s investment logic, this move is based on a systematic assessment of the US federal debt growth rate, fiscal deficits, and related policy uncertainties. As an institution representing the interests of long-term investors, pension funds typically make significant portfolio adjustments when they perceive notable risk signals.

European Institutions Generally Alert, Reducing US Assets Becomes a New Trend

Alecta is not acting alone. Danish pension fund AkademikerPension has also announced a similar move, planning to fully exit its $100 million US Treasury holdings. These “coincidental” actions from different countries and institutions actually reflect a shared recognition and general alertness within the European investment community regarding US fiscal risks.

When multiple top institutions simultaneously adjust their positions, it often indicates a shift in market consensus. This series of actions by European pension funds sends a clear signal to global investors: the attractiveness of US Treasuries is declining, and risk premiums may be re-priced.

Geopolitical Tensions and Fiscal Challenges Intertwined, Investors Face Reassessment

This period coincides with increasing complexity in global geopolitical situations and multiple economic uncertainties. In this environment, the sustainability of US fiscal policy has been brought to the forefront. Investors are no longer solely focused on short-term yields but are also contemplating whether the growing US federal debt could eventually become a systemic risk.

The reduction decisions by these large European institutional investors essentially serve as a “vote” on the long-term health of US finances. This shift in attitude could further influence other international investors’ allocations to dollar assets, potentially triggering a chain reaction in the US Treasury market’s capital flows.

Rethinking US Treasury Allocation, Global Investment Landscape in Transition

This round of significant European institutional divestments reflects a profound asset allocation adjustment within the international investment community. From Sweden to Denmark, from pension funds to other institutional investors, their actions indicate that the era of “unconditional trust” in US Treasuries may be over.

How things will develop remains to be seen, but it is certain that transparency and sustainability of US fiscal policy will become key reference factors in global investment decisions. This shift also prompts market participants to reconsider: as global capital flows are reshaped, the status of traditional safe assets is undergoing a silent yet profound reassessment.