Europe gains traction amid doubts over US assets, global money managers say
LONDON (Reuters) -Asset managers at Goldman Sachs and JPMorgan are fielding more investor enquiries about the resilience of U.S. assets and helping clients move more money to Europe ahead of more potential trade-related market turmoil, executives said.
The clock is ticking on President Donald Trump's 90-day pause on "reciprocal" tariffs that threaten to upend global trading ties and deepen the trade conflict between the world's biggest superpowers.
U.S. assets plummeted in April after economists slashed odds on the likelihood of a U.S. recession, leading some investors to seek refuge in perceived safe havens, such as gold and relatively undervalued European stocks and bonds, executives said during separate media events held in London this week.
Markets have rallied back since Trump eased many of the tariffs but that has only partially restored confidence, executives said.
Some investors have begun hedging the dollar, taking profits on U.S. companies, allocating more capital to Europe and Asia, and holding more cash, they said.
"I would say the average client is looking to maybe trim (U.S.) exposure, just a little bit, put a little bit more into Europe, maybe a little bit more into Asia," said Matt Gibson, head of the client solutions group at Goldman Sachs Asset Management.
"Everyone is thinking. Some are acting. But nobody that I have seen is full-out exiting the U.S.," Gibson said, flagging client queries on whether a U.S. stock market boom led by the so-called Magnificent 7 of top tech stocks had "run its course".
Investors in Europe have flipped their preference from U.S. to European-focused exchange-traded funds (ETFs) so far this year, according to Morningstar data shared with Reuters, as they diversified portfolios amid unpredictable U.S. policymaking.
European equity ETFs have pulled in 34 billion euros ($38.6 billion) of additional cash over the year to May 16, four times the 8.2 billion euros put in U.S. equity funds. In 2024, net flows into U.S. equity funds in Europe had dominated by a ratio of more than 8:1 over locally-focused products.
Executives at JPMorgan Asset Management also said they had seen stronger client interest in Europe, including investments in private assets, as countries, such as Germany unveiled bigger spending plans.
"We are certainly getting more questions about investing in Europe," said Brandon Robinson, deputy global head of private markets.
Goldman Sachs Asset Management has been discussing with clients how to put asset and currency hedges back into portfolios to mitigate risks, multi-asset co-Chief Investment Officer Alexandra Wilson-Elizondo said.
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