Institutional investors are pulling back from US equities and the dollar in record numbers, as President Trump’s aggressive tariff policies send shockwaves through global markets and push growth expectations to a 30-year low.
According to the latest Bank of America survey of top fund managers, investors are adopting their most bearish stance on the dollar in nearly two decades. The poll, conducted between April 4 and 10, surveyed 164 institutional investors managing a combined $386 billion in assets. It paints a stark picture of the shifting sentiment as capital flees riskier US assets and pours into safe havens like gold and government bonds.
A net 61 per cent of respondents expect the dollar to weaken over the next year—the highest proportion since May 2006—while more than two thirds view it as overvalued. The greenback, typically a magnet for inflows during times of market turmoil, has defied conventional patterns and dropped nearly 10 per cent from its January peak on a trade-weighted basis.
Wednesday saw the dollar fall a further 0.6 per cent after Trump announced a 145 per cent tariff on Chinese imports, while offering a 90-day delay on reciprocal tariffs for over 70 other nations. The pound climbed 0.3 per cent against the dollar to reach $1.33.
David Folkerts-Landau, group chief economist at Deutsche Bank, warned: “The world is facing a dollar confidence crisis. This potentially marks the largest shock to the world’s financial and trading system since the collapse of Bretton Woods in 1971.”
Investor flight from the dollar has coincided with a dramatic withdrawal from US equities. Allocations to American stocks have suffered the steepest two-month decline on record, with the sharpest outflows from sectors like industrials, technology, and banking. Conversely, appetite for defensive sectors such as utilities is at a 20-year high.
The broader picture is one of rising uncertainty. Global recession fears are at their fourth highest level in two decades, and inflation expectations have surged to levels not seen since 2021. A third of those surveyed expect the Federal Reserve to deliver at least two rate cuts before the end of the year.
As confidence in traditional US asset classes fades, investors are doubling down on gold. The precious metal surged to a record $3,300 per ounce this week, reflecting its enduring appeal as a store of value. Nearly half of fund managers labelled gold the world’s “most crowded trade”, and while some flagged concerns over its valuation, a majority still see it as the best-performing asset class in 2025.
Chris Turner, global head of markets at ING, said the US administration had effectively achieved its goal of weakening the dollar—albeit at great cost: “Trump’s wishes for a weaker dollar have been fulfilled, although with much collateral damage to the global economy and asset markets. In practice, the US growth outlook has collapsed, and sharp dislocation in US asset markets has questioned the dollar’s safe-haven role.”
Meanwhile, US Treasury Secretary Scott Bessent, a former hedge fund executive, has hinted at potential measures to stabilise the bond market, including easing capital requirements on banks to encourage the purchase of US debt. Bessent has also voiced longstanding concerns that excessive foreign demand for the dollar has overvalued the currency and damaged American export competitiveness.
With sentiment turning and volatility rising, the shift from Wall Street to safer shores appears to be accelerating—raising difficult questions about the resilience of the US economy and the future role of the dollar as the world’s financial cornerstone.
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Investors retreat from US stocks and dollar as Trump’s tariff war sparks global market unease