{"id":332086,"date":"2025-12-08T09:25:17","date_gmt":"2025-12-08T09:25:17","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/332086\/"},"modified":"2025-12-08T09:25:17","modified_gmt":"2025-12-08T09:25:17","slug":"pensions-dump-us-equities-over-ai-fears","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/332086\/","title":{"rendered":"Pensions dump US equities over AI fears"},"content":{"rendered":"

Welcome to FT Asset Management, our weekly newsletter on the movers and shakers behind a multitrillion-dollar global industry. This article is an on-site version of the newsletter. Subscribers can sign up here<\/a> to get it delivered every Monday. Explore all of our newsletters here<\/a>.<\/p>\n

Does the format, content and tone work for you? Let me know: emma.dunkley@ft.com<\/a><\/p>\n

In today\u2019s newsletter:<\/p>\n

British pension funds sell US stocks on AI fears<\/p>\n

Bond investors sound alarm over next Fed chair<\/p>\n

US stocks set for double-digit gains<\/p>\n

UK pension funds dump US equities<\/p>\n

Is an AI bubble on the horizon? Some of the UK\u2019s biggest pension funds think so and are cutting back their exposure to US equities as a result.<\/p>\n

Schemes managing more than \u00a3200bn in assets for millions of British savers told the Financial Times<\/a> they had been shifting allocations to other geographical regions or adding protection against a potential fall in stock prices in recent months, write Josephine Cumbo and Mary McDougall.<\/p>\n

The moves come as the tech-heavy Nasdaq Composite index has shot up more than 20 per cent this year \u2014 and more than doubled since early 2023 \u2014 driven by the so-called Magnificent Seven stocks such as Nvidia, Alphabet and Meta.<\/p>\n

This has fuelled concerns about the market\u2019s growing concentration in a small number of stocks and the risk of a bubble that could leave retirement savers exposed to a sharp sell-off.<\/p>\n

\u201cWe recognise the specific risks associated with US equities, such as tariff measures and the concentration in large tech stocks,\u201d said Callum Stewart, head of investment proposition at Standard Life, part of the Phoenix Group. It oversees the \u00a336bn Sustainable Multi Asset fund serving 2mn members, where roughly 60 per cent of its equity assets are in North America.\u00a0<\/p>\n

Stewart said the fund was in the process of reducing its allocation to US stocks and was instead boosting exposure to UK and Asian markets.<\/p>\n

The UK\u2019s defined contribution pension sector, in which employees, typically with employer support, build individual retirement pots, is especially sensitive to potential stock market swings because younger savers are often heavily invested in US indices, which are dominated by the Magnificent Seven.\u00a0<\/p>\n

Savers 30 years from retirement typically have 70 to 80 per cent \u2014 or even 100 per cent \u2014 of their assets in global equities, with most equity allocations dominated by US Big Tech.<\/p>\n

Bond investors sound the alarm<\/p>\n

Bond investors have told the US Treasury they are concerned about Kevin Hassett\u2019s potential appointment as Federal Reserve chair, worrying he will cut interest rates aggressively to please President Donald Trump.<\/p>\n

The Treasury department solicited feedback on Hassett and other candidates in one-on-one conversations with executives at major Wall Street banks, asset management giants and other big players in the US debt market, according to several people familiar with the conversations.<\/p>\n

The discussions took place in November, before Treasury secretary Scott Bessent held his second round of interviews with candidates to replace Jay Powell as Fed chair when his term expires in May 2026, these people said.<\/p>\n

The Treasury said it \u201cregularly engages with a variety of market participants and investors on important developments and dynamics in the Treasury market and broader financial markets\u201d.<\/p>\n

It added: \u201cDuring discussions with key stakeholders, the expected distribution of market outcomes across several asset classes for the five potential Federal Reserve chairs was extremely narrow.\u201d<\/p>\n

Hassett, the White House\u2019s top economic official, has emerged as a frontrunner for the position in recent weeks, as Trump and Bessent have whittled down the list of potential candidates from 11 initial contenders.<\/p>\n

Trump on Tuesday said he planned to name his pick for Fed chair \u201cearly\u201d next year, and signalled Hassett was a \u201cpotential\u201d contender. The US dollar briefly slipped on the president\u2019s mention of Hassett.<\/p>\n

The White House told the FT that \u201cthe president will continue to nominate the most qualified individuals to the federal government and, until an announcement is made by him, any discussion about potential nominations is pointless speculation\u201d.<\/p>\n

Chart of the week\"\"<\/p>\n

Wall Street banks expect US stocks to post another year of double-digit gains<\/a> in 2026, defying recent investor jitters over Big Tech companies\u2019 huge spending plans and a potential bubble in the artificial intelligence sector.<\/p>\n

The blue-chip S&P 500 index will rise to more than 7,500 points by the end of 2026, a roughly 10 per cent increase from its current level, according to the average forecast of nine major investment banks surveyed by the FT.<\/p>\n

The index closed on Thursday at 6,857, having hit a record high of 6,920 in October, write Rachel Rees and Jonathan Vincent.<\/p>\n

While such gains would mark the seventh year of double-digit gains in the past eight, they would represent a slowdown from the 16.6 per cent rise so far in 2025 and the average over the past decade.<\/p>\n

Nevertheless, the forecasts indicate a belief on Wall Street that markets have put last month\u2019s pullback \u2014 sparked by concerns over high AI valuations \u2014 behind them, helped by President Donald Trump\u2019s tax cuts and the prospect of interest rate cuts.<\/p>\n

\u201cThere will be some bumps along the way, but we believe that the bull market is intact,\u201d said analysts at Morgan Stanley, who expect the S&P to reach 7,800 by the end of next year.<\/p>\n

Performance will be boosted by \u201cthe triumvirate of easy fiscal, monetary and regulatory policy, along with AI tailwinds\u201d, they added, pointing to the estimated $129bn of corporate tax cuts in Trump\u2019s \u201cone big beautiful bill\u201d.<\/p>\n

Five unmissable stories this week<\/p>\n

Investment boutique Ruffer has axed a fifth of its staff as it seeks to cut costs<\/a> following a drop in profits during a difficult period for the contrarian fund manager.<\/p>\n

Index provider MSCI has launched a global benchmark incorporating both public and private equities<\/a>, as investors increasingly look to private markets to boost returns and diversify their portfolios. <\/p>\n

Aberdeen has struck a deal<\/a> to take on Stagecoach Group\u2019s defined benefit pension scheme in one of the first agreements of its kind, which will boost the investment firm\u2019s assets by \u00a31.2bn. <\/p>\n

Hedge funds and trading firms are piling into physical commodities <\/a>markets in search of new sources of returns, despite lacking the decades of experience and information accumulated by established players such as Trafigura and Vitol. <\/p>\n

Singapore\u2019s investment giants are at risk <\/a>of being left behind: Temasek and GIC are integral to the finances of the south-east Asian city-state, but recent returns have compared unfavourably with many global peers.<\/p>\n

And finally\"\"Gabriele M\u00fcnter\u2019s Portrait of Anna Roslund, 1917 \u00a9 2025 Artists Rights Society (ARS), New York<\/p>\n

Gabriele M\u00fcnter was at the vanguard of modern art in early 20th-century Europe. This exhibition<\/a> at the Guggenheim in New York focuses on M\u00fcnter\u2019s commitment to subjects rooted in daily life, with more than 50 paintings and a series of photographs. <\/p>\n

Gabriele M\u00fcnter: Contours of a World, until April 26<\/p>\n

Thanks for reading. If you have friends or colleagues who might enjoy this newsletter, please forward it to them. Sign up here<\/a><\/p>\n

We would love to hear your feedback and comments about this newsletter. Email me at emma.dunkley@ft.com<\/a><\/p>\n

Recommended newsletters for you<\/p>\n

The Week Ahead \u2014 Start every week with a preview of what\u2019s on the agenda. Sign up here<\/a><\/p>\n

Working It \u2014 Everything you need to get ahead at work, in your inbox every Wednesday. Sign up here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Welcome to FT Asset Management, our weekly newsletter on the movers and shakers behind a multitrillion-dollar global industry.…\n","protected":false},"author":2,"featured_media":332087,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[45,49,48,133,131,132],"class_list":{"0":"post-332086","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-ca","10":"tag-canada","11":"tag-finance","12":"tag-personal-finance","13":"tag-personalfinance"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/332086","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=332086"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/332086\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/332087"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=332086"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=332086"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=332086"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}