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Global investors pivot from selling US assets to cautious strategies, fueling the rise of the “Hedge America” trade.
Stock market
Global investors are shifting their strategy from outright retreating from U.S. markets to a more cautious approach known in financial circles as the “Hedge America” trade. The narrative reflects growing skepticism about the future returns and risk dynamics of U.S. assets — particularly the dollar — even as many institutions continue to hold significant exposure to American stocks and bonds.
From ‘Sell America’ to Hedging U.S. Exposure
The term Sell America gained traction in 2025 as geopolitical tensions, trade policy uncertainty and concerns over high valuations prompted some investors to reassess heavy allocations to U.S. equities, Treasurys, and the dollar. This sell-off story encompassed moves out of U.S. assets and into foreign equities, alternative markets and other currencies as part of diversification strategies.
However, recent market behaviour suggests this trend is evolving. Instead of wholesale selling of U.S. assets, many global investors are now choosing to hedge their exposure — meaning they retain holdings in U.S. stocks and bonds but use financial tools such as currency hedges, derivatives and structured products to protect against downside risks. This nuanced shift is what market watchers refer to as the Hedge America trade.
Why Investors Are Hedging Instead of Selling
Several key market developments are driving this shift. The U.S. dollar has weakened by roughly 8% over the past year, prompting foreign investors to manage currency risk even while keeping U.S. asset exposure. Moreover, slowing foreign purchases of U.S. Treasury bonds and heightened macroeconomic uncertainty have added layers of complexity to investment decisions.
Rather than abandoning U.S. markets outright, institutions such as European pension funds and insurers are said to be increasing their hedging ratios — effectively limiting currency and interest rate risks while staying invested in U.S. equities and fixed income. This approach allows investors to balance potential returns with risk control, especially in an environment of volatile policy direction and uneven global growth.
What the Hedge America Trade Signals
The emergence of the Hedge America trade underscores a more cautious, strategic mindset among global capital allocators. It reflects confidence that U.S. markets and corporate earnings still play a central role in diversified portfolios, yet acknowledges that risks — from currency volatility to policy shifts — are no longer negligible.
Institutional investors are now focusing on ways to protect their U.S. allocations without completely divesting, which may help stabilise markets while still accommodating risk management imperatives. For global markets, this trend suggests that outright capital flight from U.S. assets may be less significant than earlier feared, even amid ongoing debates about the long-term attractiveness of America’s yields, equity valuations and geopolitical positioning.
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February 13, 2026, 12:28 IST
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