The US has long occupied a dominant position as a magnet for investment, with US treasuries offering a safe haven for global portfolios, and the country’s capital markets offering an unrivalled degree of depth and liquidity. Add the country’s reputation for world-class innovation, robust institutions, strong rule of law and a track record of stable returns into the mix, and it’s not difficult to see why it is perceived as a go-to destination for investors.
But today, the picture is more complex. Investors are asking whether persistent fiscal pressures, political risks and rising protectionism are beginning to chip away at that status, and whether it is time to diversify more aggressively into other regions.
“The dollar’s reserve status and Treasuries’ role in portfolios is also being questioned amid massive global exposure; investment imbalances may drive a shift toward non-US assets and a weaker dollar,” said Michael Grady, Head of Investment Strategy and Chief Economist at Aviva Investors, in a July release.
So, what’s happening?
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