Are Foreign Investors Really Ditching U.S. Assets?
“The dollar continues its global dominance now, but its era will not last forever.” – Kenneth Rogoff, author
The predicted demise of the U.S. dollar isn’t a new phenomenon. The impending doom of the greenback goes back to the 1970’s…
When President Nixon suspended dollar convertibility into gold in August 1971, many economists believed the dollar’s reserve status was effectively finished.
By 1978, U.S. inflation was surging and the dollar was falling sharply. Many warned of crisis of confidence in the dollar. There were concerns that oil exporting countries would abandon dollar pricing.
Similar narratives are making the front-page news…
“Is the United States Dollar Be Dethroned? Could the U.S. dollar lose its place as the world’s reserve currency?” — Charles Schwab commentary (Feb 2025)
“U.S. dollar’s haven status under threat, fund managers warn” — Financial Times (Apr 2025)
Does the “sell America” narrative hold water?
It’s complicated. The good news is we don’t have to rely on narratives or click-bait headlines to understand if foreign investors are ditching U.S. assets.
In this post, we examine foreign flows into U.S. assets, foreign ownership percentage of U.S. Treasuries & equities, and the risks to the dollar’s reserve currency status.
The Dollar’s Role in Global Trade
Source: Bank for International Settlements
The above graph shows the prominent role of the dollar in global trade flows. The U.S. dollar was involved in nearly 90% of global currency transactions, making it the single most traded currency in the market (as of 2022). We’ve been on record stating foreign countries and companies want to sell their goods and services to the U.S. consumer, hence, transacting in dollars isn’t an option, but a necessity. Notice how steady the red bar has been over the past 20+ years.
U.S. Assets Dominate the World
The above graph shows the share of U.S. equities and government debt as a percentage of global assets. U.S. assets represent a record share of global financial assets, fueled by a long bull market for U.S. stocks and record government debt issuance. For an allocator of capital, it would be tough to shun U.S. assets given the strong performance of U.S. equities and the safety and soundness of Treasuries.
Foreign Investors Still Own U.S. Treasuries
The above chart shows the change in foreign holdings of U.S. Treasuries (2011-2024). Going back ~10 years, the level of foreign ownership of U.S. Treasuries has been quite steady.
A similar trend has emerged for foreign ownership in U.S. stocks…
The above graph shows record foreign ownership in U.S. companies. In the digital world, capital flows at the click of a mouse button. U.S. corporations are still the envy of the world when it comes to innovation, return on invested capital, and shareholder rights.
What about recent foreign investment flows?
We can track cross border capital flows into and out of the United States using the monthly Treasury International Capital report (TIC). We put together the past 12 months of foreign flows data…
Source: ChatGPT Pro
The above graph shows monthly Treasury International Capital foreign flows data for the past 12 months. While flows can be noisy from month to month, foreign investors have been net buyers of U.S. assets over the past year. It would seem the “sell America” narrative is overblown.
What are the risks to U.S. dollar dominance?
- History shows that global reserve currency status doesn’t last forever. The British Sterling started to lose its shine after WWI; the dollar will eventually, too, but these structural shifts do not happen overnight.
- The “Weaponization” of the dollar can create global resentment. When countries get frozen out of global markets due to sanctions, it’s natural to look for other alternatives to conduct trade, commerce, and the frictionless flow of capital.
- The dollars demise is likely to come from within. Unchecked deficits, fiscal recklessness, political dysfunction, and Fed policy errors could contribute to the dollar’s eventual decline.
In summary…
- The narrative of foreign investors shunning U.S. assets is likely exaggerated.
- Global reserve currency regime changes do occur, but they don’t happen overnight.
- Foreign investors generally find U.S. assets attractive because of deep markets, strong legal protections, and liquidity. When the stuff hits the fan, foreign investors still want to own dollars and U.S. Treasuries.
- We don’t have to rely on sensationalized headlines to capture what’s happening with foreign flows into and out of U.S. assets. The humble, evidence-based investor can reference flow statistics (like monthly TIC numbers) to make better decisions.
If you have questions about Waverly Advisors investment process, shoot us a note @ [email protected]
Written by Nik Schuurmans, CFA®
Nik Schuurmans joined Waverly Advisors in January 2026 after Pure Portfolios was acquired by Waverly Advisors, LLC. As Partner and Wealth Advisor, Nik operates using a transparent and pioneering fee structure, to provide a modern wealth management experience for every client. Nik believes access to professional advice should not come with exorbitant fees, misaligned incentives, and conflicts of interest. Learn More About Nik…
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