Sovereign investors with $29 trillion pivot to energy assets, flag dollar fears

• 61% of central banks surveyed said U.S. debt levels negatively impact the dollar's long-term reserve status, up sharply from 20% in 2024, with 29% expecting weaker reserve-currency status within five years
• 80% identified renewable energy and energy transition infrastructure as most credible resilience investments, with infrastructure reaching 9% of sovereign wealth fund assets in 2026
• One-third plan to increase gold holdings for diversification, while some institutions are replacing U.S. custodians or establishing non-U.S. custodial relationships to prepare for 'worst-case scenarios'

Summary: Sovereign Investors Shift to Energy Assets Amid Dollar Concerns

Sovereign wealth funds and central banks controlling $29 trillion in assets are pivoting toward energy investments and diversifying away from U.S. dollar dependence, according to an Invesco survey of 90 sovereign funds and 54 central banks released Monday.

Key Findings:

• Energy Focus: 80% of respondents identified energy and energy transition infrastructure as the most credible resilient investments. Infrastructure now represents 9% of sovereign wealth fund assets as of 2026, driven partly by AI data center buildout demands.

• Dollar Concerns Escalating: 61% of central banks said U.S. debt levels negatively impact the dollar's long-term reserve status—up sharply from 20% in 2024. Additionally, 29% believe the dollar's reserve currency status will weaken within five years, compared to just 12% in 2022.

• Diversification Strategies: One-third of institutions plan to increase gold holdings. Several are reviewing reliance on U.S.-based custodians, counterparties, and clearing infrastructure due to geopolitical tensions. One European central bank has already replaced its U.S. custodian, while a Latin American bank is establishing non-U.S. custodial relationships for "worst-case scenarios."

Market Context:

The shift reflects responses to inflation shocks, geopolitical fragmentation, and ongoing conflicts in Ukraine and the Middle East. Invesco's Benjamin Jones noted that "resilience is becoming a hard requirement, not a nice-to-have."

While no credible dollar alternative exists, making any transition incremental, concerns are "widespread and deepening." However, one central bank warned that moving away from U.S. infrastructure "could be interpreted as hostile by the U.S."

The survey highlights a fundamental reassessment of portfolio strategies among the world's largest institutional investors as they navigate unprecedented geopolitical uncertainty.