European Pension Funds Shift from US To European Markets

European pension companies are shifting from US to European stocks, with investors withdrawing $2.8 billion from US stock funds and redirecting $5 billion into European equities last week.

Danish pension fund PensionDanmark was among these investors, shifting DKK 14 billion ($2 billion) from the US to the European market, which is equivalent to 10% of its total portfolio.

Meanwhile, Finnish firm Veritas has also reduced its exposure to US-listed equities, dropping from 46.2% at the end of 2024 to 24.1% currently. Instead, it has increased its holdings in European equities from 19.8% to 25.3% and Finnish equities from 23.0% to 32.0%.

In Sweden, fund investors withdrew SEK 13.68 billion ($1.31 billion) from North American equity funds and SEK 10.59 billion ($1.01 billion) from sector funds in February. Swedish equity funds saw the highest net inflows at SEK 22.7 billion ($2.17 billion), followed by global equity funds with SEK 9.87 billion ($943 million) and European funds with SEK 7.3 billion ($698 million).

The shift reflects growing investor confidence in European economies, driven by expectations of increased growth following a major investment package in Germany and the European Commission’s commitment to raise €150 billion ($164 billion) for defense spending.

At the same time, US President Donald Trump's escalating tariff threats and evolving economic policies have sparked fears of a trade war, which has unsettled investors and increased the risk of a US recession. While the American stock market was once a global favorite, it is now feeling the pressure as uncertainty mounts.