Sovereign wealth funds and central banks managing $29 trillion in assets are turning to energy assets, and raising concerns about the dollar, in a portfolio reassessment driven by unprecedented geopolitical shifts, according to an Invesco survey published on Monday.
The survey of 90 sovereign wealth funds and 54 central banks showed an increasing focus on diversification, and investment portfolios that can “take a hit and still hold it together” amid trade tariffs, closed shipping channels and wars in Ukraine and the Middle East.
Some 80% of those polled said energy security and energy transition infrastructure were the most credible investments for making their portfolios more resilient, and infrastructure reached 9% of sovereign wealth fund assets in 2026.
The race to build energy-hungry AI infrastructure added to the appeal, the report by the global investment management firm found.
“In a world of inflation shocks, geopolitical fragmentation and more concentrated markets, investors are rethinking old assumptions about diversification and redesigning portfolios to withstand a wider range of outcomes,” Invesco head of research Benjamin Jones said.
“Resilience is becoming a hard requirement, not a nice-to-have.”
The positive bond-equity correlation in recent years has also eroded reliance on bonds for diversification, with more focusing on liquidity and real assets.
DOLLAR, DEBT, AND RISK
Concerns about the dollar were “widespread and deepening,” and 61% of central banks polled also said that U.S. debt levels negatively impact the dollar’s long-term position as a reserve asset, up from 20% in 2024.
While the U.S.-Israeli war with Iran has helped lift the dollar 3% this year, analysts say U.S. policy uncertainty and high debt mean the currency could weaken over the long term.
The lack of a credible dollar alternative is likely to make any shift away from it incremental, but 29% of those in the Invesco survey said the dollar’s reserve-currency status will be weaker in five years, up from 12% in 2022.
Several institutions also reported reviewing their reliance on U.S.-based custodians, counterparties and clearing infrastructure due to geopolitical tensions, Invesco said.
One European central bank said it had already replaced its U.S. custodian. A Latin American central bank said it was setting up new non-U.S. custodial relationships to prepare for a “worst-case scenario.”
But one central bank respondent said any such move was fraught: “This act in and of itself could be interpreted as hostile by the U.S.”
One-third of those polled meanwhile said they intended to boost gold holdings as part of the diversification trend.
(Reporting by Libby George)
