Amid sustained pressure on the U.S. dollar from President Donald Trump's policies, one of Canada's largest institutional investors is eyeing the Swiss franc, Japanese yen, and gold as potential alternatives.
In its annual Global Outlook report released Wednesday, Investment Management Corporation of Ontario (IMCO) stated that while U.S. Treasury yields rose after Trump announced sweeping tariffs on April 2 last year, the U.S. dollar still declined, which may signal that investors no longer view it as a safe-haven currency.
The pension fund manager also noted that the dollar's recent performance reinforces the message that the United States may no longer be a stable partner.
"U.S. efforts to accelerate the addressing of global imbalances, combined with Trump's unpredictable and unconventional approach, could push up inflation and bond yields while putting pressure on the dollar for years to come," the corporation said in the report.
A spokesperson for IMCO clarified that the document does not necessarily indicate the fund is taking immediate action on its currency exposures.
Trump's comment on Tuesday that he does not believe the dollar is overvalued intensified the view of a prolonged dollar decline. U.S. Treasury Secretary Scott Bessert provided some support for the currency on Wednesday by downplaying speculation about potential market intervention to sell dollars and buy yen during a CNBC interview, reiterating a long-standing "strong dollar policy."
Some asset managers are already seeking alternative safe havens.
Recently, European pension managers such as AkademikerPension and Alecta announced they are reducing their holdings of U.S. Treasuries, citing significant credit risks stemming from Trump's policies that cannot be ignored.
IMCO, which manages approximately C$86 billion (US$63.5 billion) in assets for public sector workers, government agencies, and schools, suggested that besides focusing on other currencies, investors could also consider physical assets in strategically important sectors like artificial intelligence and energy-related infrastructure.