Global plans shift currency and regional bets as Trump-era volatility reshapes greenback risk
Pension funds are no longer treating US dollar risk as background noise — they are building it into core portfolio decisions.
According to Bloomberg, US President Donald Trump helped push the greenback lower when he said he was comfortable with its recent weakness, reinforcing a slide that began amid his threats to take over Greenland and repeated challenges to the US Federal Reserve’s independence.
The Financial Post reports the US dollar has fallen to its lowest level since 2022 and helped drive gold and silver to all‑time highs, raising questions about whether Washington still backs a strong‑dollar policy.
For Canadian pension plans that have long leaned on US assets and the greenback for returns and diversification, this mix of political risk and currency volatility is no longer theoretical.
According to Bloomberg, the Toronto Transit Commission Pension Fund, which manages about $9.2bn, has been adding to Europe “most significantly” while keeping roughly 40 percent of assets in the US and 30 percent in Canada.
Chief investment officer Andrew Greene said the fund is “relatively light” Europe compared with the rest of the portfolio and sees opportunity there, and the plan already holds real estate, infrastructure and private credit in the region.
Greene said he is concerned about the uncertainty created by Trump’s tariffs and his pressure on the Fed, even as the day‑to‑day rule of law in the US still supports doing business.
UBC Investment Management is responding in a different way.
It oversees about $7bn for the University of British Columbia and is leaning into Asia for diversification.
Chief executive Dawn Jia said there is “growing concern in markets right now about the possibility of US dollar depreciation, and those concerns are not without merit,” but stressed the fund will not overreact to short‑term political developments.
Instead, she said the plan is trying to gain exposure “to a wider set of regional economies — particularly Asia Pacific.”
Other large Canadian investors are focusing directly on currency and funding.
Jo Taylor, chief executive of the Ontario Teachers’ Pension Plan Board, told Bloomberg at the World Economic Forum in Davos that the fund reduced its exposure to the US dollar and US Treasuries in the first quarter of last year due to the “risk of a deflationary dollar.”
Foreign exchange has become a central risk for Canadian funds with heavy US exposure.
As per the Financial Post, former Healthcare of Ontario Pension Plan chief executive Jim Keohane, now on the board of Alberta Investment Management Corp., said that “if the US dollar weakens due to the political uncertainty, it can overwhelm the returns you earn on US assets.”
In the same article, DBRS Morningstar said Canadian pensions have continued to move away from US‑dollar borrowing, with issuance in US dollars at its lowest level in six years while borrowing in other currencies has increased to support global investment strategies.
Some are also looking at safe‑haven and alternative assets.
According to Bloomberg, the Investment Management Corp. of Ontario highlighted the Swiss franc, Japanese yen and gold as potential alternatives to the US dollar in its “World View 2026” report, and suggested Canada’s response to US trade policy — including a stronger focus on major infrastructure projects — could expand domestic investment opportunities.
Global peers are arriving at similar conclusions.
Reuters reports that Australian Retirement Trust, Australia’s second‑largest pension fund with A$353bn under management, is not cutting its US equity holdings but is increasing currency hedging to reduce exposure to a forecast weaker US dollar.
General manager Andrew Fisher told Reuters that markets expect US rate cuts while Japan and Australia are likely to raise rates and Europe holds steady, a backdrop he believes will weigh on the greenback.
He said the fund plans to hedge more of its US equities and leave other markets, such as Japan, more unhedged to “get that balance right.”
In South Korea, policy is evolving in a way that Canadian investors will recognise.
First Vice Minister of Health and Welfare Seuran Lee wants the National Pension Service — about US$992.24bn fund — to begin issuing foreign‑currency bonds by year‑end, pending legislative changes.
She said it would make sense to cap issuance as a proportion of overseas investments, a structure she noted mirrors the approach used by the Canada Pension Plan Investment Board.
The goal is to manage exchange‑rate volatility and reduce pressure on the won, which has fallen about seven percent against the US dollar since mid‑2025.
At the macro level, currency specialists do not see these concerns fading quickly.
Reuters reports the US dollar has fallen nearly 11 percent since Trump took office, with his calls for lower interest rates and apparent indifference to a weaker currency accelerating the decline.
In a Reuters survey, most foreign‑exchange strategists said they expect the greenback’s recent rebound to be short‑lived and described the dollar as likely to be “choppy” before resuming a broader decline.
The Financial Post notes that economists Avery Shenfeld and Douglas Porter still see part of the move as mean reversion after years of strength.
They also link the surge in gold and silver to a “debasement trade” and “de‑dollarization,” where some countries and investors are actively moving away from the US dollar.
