Institutional investors tilt away from the US dollar toward safe-haven currencies and real assets
The world’s dominant reserve currency is wobbling – and one of Canada’s major pension managers is openly talking about life beyond the US dollar.
According to Bloomberg, Investment Management Corp. of Ontario (IMCO) is recommending the Swiss franc, Japanese yen and gold as potential alternatives to the greenback as US President Donald Trump’s policies put renewed pressure on the currency.
In its latest World View report, IMCO says the acceleration in US efforts to address global imbalances, combined with Trump’s “unpredictable and unconventional approach,” could weigh on the US dollar in the years ahead while potentially lifting inflation and bond yields.
A spokesperson told Bloomberg the report does not necessarily reflect specific changes to IMCO’s currency positions.
This shift comes as the greenback weakens even when traditional supports hold.
The US dollar slid despite rising Treasury yields after Trump’s April 2 tariff announcements, a pattern IMCO reads as a sign investors may no longer view the currency as a safe haven.
The pension manager also argues that the dollar’s recent performance reinforces the message that the US may no longer be a consistently stable partner.
Bloomberg reported that IMCO manages about $86bn for public-sector workers, government bodies and schools, and that more than half of its assets sat in the US as of December 31, 2024.
Canadian pension funds rank among the largest holders of US assets globally, so unfavourable moves in the loonie–greenback exchange rate can directly damage returns.
IMCO’s report suggests investors can manage risk by shifting geographic exposure away from the US and by looking at both alternative currencies and real assets.
The fund highlights physical assets tied to strategic areas such as artificial intelligence and energy infrastructure.
It argues that because “you ‘need stuff to make stuff,’” governments’ efforts to build productive capacity and secure supply chains could create opportunities in commodities, materials, energy and other natural resources.
Bloomberg also reported that IMCO sees Canada’s response to US trade pressure – including a focus on big infrastructure projects – as a way to broaden domestic opportunities.
The largest Canadian funds already hold substantial infrastructure assets worldwide, including ports, renewable power, airports and energy infrastructure.
Prime Minister Mark Carney’s government is pushing to grow exports to non-US markets and promoting major initiatives such as port expansions that may encourage more pension investment at home.
The currency backdrop they are reacting to is weakening.
Unlike the buoyant US stock market, the dollar is “sinking fast,” with the greenback at a four-year low on the ICE US Dollar Index and down more than 3 percent since mid-January, according to CBS News.
The slide is raising import costs for American companies already facing wide-ranging tariffs, and that economists link the decline to both fresh tariff threats and the risk of another government shutdown, as well as a longer-term shift into hard assets such as gold, citing a 2025 JPMorgan Chase report.
Policy uncertainty sits at the centre of that story.
FxPro chief market analyst Alex Kuptsikevich told CBS News that “Trump’s promotion of tariff policy and pressure on the Fed to lower the key rate” have driven the latest leg down in the dollar.
He said those factors have resurfaced with a new round of tariff threats and Trump’s comments that he feels comfortable with the dollar at its current level.
At the same time, Nigel Green, CEO of de Vere Group, told CBS News that the currency’s strength depends on “institutional stability, fiscal credibility and policy predictability,” and argued that shutdown risks weaken all three pillars.
Market strategists now describe the greenback as being in a bear market.
CNBC reported that the dollar just suffered its worst one-day slide since April, when Trump’s “liberation day” tariff announcements triggered what became known as the Sell America trade.
The US dollar index has already fallen 2.2 percent this year after dropping more than 9 percent in 2025.
Trump has consistently touted the benefits of a weaker currency. He has long argued a devalued US dollar helps trade and has attacked countries that push their own currencies lower against the greenback.
In July, he said, “It doesn’t sound good, but you make a hell of a lot more money with a weaker dollar... than you do with a strong dollar,” while saying he prefers a moderately weaker currency rather than an extremely weak one.
For investors, that stance cuts both ways.
CNBC reported that Nela Richardson, chief economist at ADP, called the dollar’s decline a “double-edged sword,” saying it boosts export competitiveness but does not always reassure markets at a time of sticky inflation, high deficits and debts, and continuing reliance on domestic and foreign buyers of Treasuries.
She told CNBC that the weakness in the currency signals a more complex “puzzle of the US economy,” where strong headline numbers mask underlying strains.
