Foreign investors say adios to US

While US equities may have recovered slightly over the past few days after the White House turned down the heat on the trade war rhetoric, it may be too little too late: Foreign investors are still taking their money elsewhere.

Overseas investors have sold $63 billion worth of US equities since the beginning of March, Goldman Strategist Daniel Chavez wrote in a recent note to clients. That’s a problem, Chavez argued, because foreign investors owned a record 18% of the US equity market at the start of 2025.

That’s not all: Franklin Resources CEO Jenny Johnson observed the same trend, arguing that her firm has also seen foreign institutional investors pull back from the US.

“You definitely see non-Americans reducing—on the institutional side—some of their exposure to US equities,” Johnson explained on Bloomberg TV, arguing that Trump’s nationalist rhetoric is offending investors from close allies like Canada.

Janus Henderson CEO Ali Dibadj said that the firm could potentially cut all of its clients' exposure to the US by 10%, and move their assets into European, Chinese, Middle Eastern, and Latin American markets instead, Bloomberg reported.

Zoom out: It’s not just tariffs that are driving investors away. Signs of a potential recession, stagflation, and ongoing questions about President Trump chipping away at the Federal Reserve’s independence have investors worried about putting their money into US assets.

All this poses an existential risk to the US economy that may ultimately be more harmful than capital fleeing the country. Citadel CEO Ken Griffin argued at Semafor’s World Economy Summit that President Trump’s tariff policy flip-flops are “eroding” the US brand.

“It can be a lifetime to repair the damage that has been done,” Griffin said.

To be clear, not all foreign investors are fleeing the US. Norway’s sovereign wealth fund, the largest such fund in the world, doubled down on American equities even after taking steep losses in the first quarter.

Where are investors heading instead?

Global investors are looking for viable alternatives to US equities. One nation that’s particularly benefited is Japan.

International traders bought a net $67.5 billion in Japanese equities and bonds this month, its biggest monthly inflow ever. Roughly two thirds of that money has gone into bonds, Bloomberg reported.—LB