Sovereign wealth funds and central banks managing $29 trillion in assets are reassessing their investment strategies as concerns grow over the long-term role of the US dollar, according to a survey published by global investment management firm Invesco on Monday.
The survey, which covered 90 sovereign wealth funds and 54 central banks, found that institutions are increasingly focused on diversification and building portfolios designed to withstand geopolitical disruptions, including trade tariffs, disrupted shipping routes and conflicts in Ukraine and the Middle East.
Concerns over the US dollar’s future position as the world’s leading reserve currency were among the key findings. According to the survey, 61% of central banks said rising US debt levels were negatively affecting the dollar’s long-term role as a reserve asset. That figure increased sharply from 20% in 2024.
The survey also found that 29% of respondents believe the dollar’s reserve-currency status will be weaker in five years, compared with 12% who held that view in 2022. However, the report noted that the absence of a widely accepted alternative currency is likely to make any move away from the dollar gradual.
Some institutions are also reviewing their dependence on US-based financial infrastructure, including custodians, counterparties and clearing systems, due to concerns linked to geopolitical tensions. Invesco said one European central bank had already replaced its US custodian, while a Latin American central bank was establishing new non-US custodial relationships as preparation for a potential worst-case scenario.
One central bank respondent warned that reducing reliance on US financial systems could carry risks, saying such a move could be interpreted by Washington as hostile.
Alongside concerns over the dollar, central banks and sovereign wealth funds are increasing their focus on physical assets and infrastructure investments. The survey found that 80% of respondents identified energy security and energy transition infrastructure as the most credible investments for improving portfolio resilience.
Infrastructure accounted for 9% of sovereign wealth fund assets in 2026, according to the report. The growing demand for energy-intensive artificial intelligence infrastructure was also identified as a factor increasing the appeal of energy-related investments.
“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.
The report said traditional reliance on bonds for portfolio diversification has weakened as positive correlations between bonds and equities have increased in recent years. As a result, more institutions are turning toward liquidity and real assets as part of their investment strategies.
Gold is also gaining attention as part of the diversification trend. One-third of institutions surveyed said they planned to increase their gold holdings.
While the US dollar has gained support in the short term, including a reported 3% rise this year linked to the US-Israeli war with Iran, analysts cited in the report said uncertainty over US policies and elevated debt levels could create longer-term challenges for the currency.
The survey reflects a broader reassessment among major financial institutions as they attempt to adjust portfolios amid changing geopolitical conditions and increased focus on resilience.
