The fund's US$100 million treasury exit signals growing unease with Washington’s debt and policy path
A Danish pension fund is walking away from US government bonds, saying Washington now looks like “not a good credit” over the long term.
According to Reuters, AkademikerPension will sell its entire US Treasury portfolio of about US$100m by the end of the month, citing weak US public finances and a shift in its liquidity and risk management strategy.
The academics-focused fund manages about roughly US$25.74bn in assets, it said on its website.
AkademikerPension casts the move as a balance sheet decision rather than a political statement.
Investment director Anders Schelde said the decision “is rooted in the poor US government finances,” which led the fund to look for “an alternative way of conducting our liquidity and risk management.”
In a separate interview with Bloomberg, Schelde said “the US is basically not a good credit and long-term the US government finances are not sustainable.”
He said the fund had held Treasuries only for risk and liquidity management and “decided that we can find alternatives to that,” adding that the move is “not directly related to the ongoing rift between the US and Europe,” even if the dispute “didn’t make it more difficult to take the decision.”
CNBC reported that the US ran a budget shortfall of US$1.78tn last year, only slightly lower than the previous fiscal year as Trump’s “broad and steep tariffs” took effect.
In May, Moody’s Ratings cut the US sovereign rating to Aa1 from Aaa, citing the deficit and higher borrowing costs on rolling over debt at elevated interest rates.
Bloomberg reported that Schelde cited Trump’s talk of taking over Greenland, alongside concerns about fiscal discipline and a weaker dollar, as among the reasons to move away from US Treasuries.
Tensions over Greenland have fuelled a broader debate in Europe about whether to use capital flows as a tool in disputes with the US, even as investors acknowledge the size of the US Treasury market makes individual moves largely symbolic.
AkademikerPension is not alone.
Bloomberg reported that Laerernes Pension cut its US Treasury exposure earlier, citing worries over US debt sustainability and pressure on US Federal Reserve independence.
PFA, which oversees about US$120bn in pension assets, also reduced its US Treasury holdings as part of a portfolio overhaul, while Paedagogernes Pension dropped Treasuries and halted new strategies focused on illiquid US assets, according to Bloomberg’s summary of local outlet FinansWatch.
At the same time, Danish funds are not exiting US risk wholesale.
PFA’s co-chief investment officer Rasmus Bessing said the fund still has “a strong belief in US corporate America” and keeps “a very large exposure to US equities” and corporate credit, arguing that trimming Treasuries helps “create the best and most diversified portfolio.”
Several funds told Bloomberg that completely removing US exposure is neither realistic nor obviously in clients’ financial interests, given the central role of US markets.
