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Several of the largest pension funds globally are pausing or reevaluating their private market investments in the US, stating they will not continue until the nation stabilizes in the wake of Donald Trump’s unpredictable policy shifts.
The actions highlight how major institutional investors are reconsidering their exposure to the world’s largest economy as the US president’s trade strategies disrupt markets, intensifying pressure on America’s private capital sector, which is facing growing liquidity challenges.
Some prominent Canadian funds are retreating from acquiring additional US private assets due to geopolitical concerns and the potential loss of tax advantages on their American investments. The Canada Pension Plan Investment Board, which manages C$699bn ($504bn) in assets, is among those reassessing its strategy.
Concurrently, a significant retirement fund in Denmark has halted new investments in American private equity due to stability concerns and Trump’s controversial hints regarding Greenland, as revealed by an executive from the fund to the Financial Times.
“If private equity funds present us with an attractive investment in the US, we will decline, asking them to return in six months when the situation is more stable, or we may need to negotiate a significant discount,” said the executive.
This month, markets have experienced significant volatility following Trump’s announcement of imposing heavy tariffs on America’s biggest trading partners, followed by a temporary 90-day pause on certain levies.
The executive from the Danish fund noted that the US’s stance on Greenland, a semi-autonomous region Trump has pressured Denmark about, is perceived as “very hostile.” They remarked, “It’s hard to feel optimistic and say, ‘let’s start investing in that country’.”
Another Danish fund is also retreating. Anders Schelde, chief investment officer at AkademikerPension, managing DKr150bn (€20bn), stated he is now reassessing the appeal of US investments “daily.”
Schelde indicated he was contemplating “quite fundamental changes” to his portfolio that “could very well lead us to significantly lessen our strategic exposure to US assets in about six months.”
Stephanie Lose, Denmark’s economy minister, told the FT that she was unaware of Danish funds modifying their approach to the US. However, she noted that funds frequently reduce investments due to “risk and uncertainty,” adding that such decisions “might reflect the impact of both tariffs and Greenland.”
CPPIB, Canada’s largest pension fund, is also growing more cautious regarding its exposure to US infrastructure, fearing a loss of tax-exempt status granted to foreign governments and their pension funds, according to an insider.
Another source familiar with the pension giant’s strategy indicated that committing fresh capital to US private capital funds would be “extremely challenging” given the geopolitical landscape.
CPPIB did not respond to requests for comments.
CPPIB holds significant stakes in over 50 industrial, retail, office, and residential properties across the US. By the end of September, it had invested nearly $50bn in US dollar-denominated private equity funds, including those managed by Silver Lake, Carlyle, and Blackstone, as per FT analysis of public data.
An insider from another large Canadian pension fund expressed that there is “a lot of uncertainty” regarding what type of infrastructure investments are welcome under the Trump administration.
“If we can’t feel confident about investing in the US for six or twelve months, we will decrease our deal-making activities… and then we may reevaluate our strategy,” the person added.
Frictions between Washington and Ottawa have escalated over tariffs and Trump’s remarks suggesting Canada could become the US’s 51st state.
Still, some Canadian pension funds anticipate their US private equity exposure to remain stable. Caisse de dépôt et placement du Québec, managing C$473bn in assets, indicated it expects half of its private equity portfolio to stay in the US.
“Investing has become challenging everywhere these days — geopolitics has turned more intricate… we plan to remain engaged in the US,” commented Martin Longchamps, head of private equity and credit at CDPQ.
However, he noted that “tariff-related issues complicate business evaluations, and we must consider that until things calm down.”
Two leading US private equity executives have expressed concern regarding Canadian investors’ willingness to make new investments in their funds.
While they haven’t yet observed any changes in capital flows, they believe Trump’s confrontational stance towards Canada has aggravated matters, risking potential political pressure on Canadian pensions to limit new investments in the US.
Additional reporting by Robert Smith in London and Richard Milne in Warsaw
