The “All-In America” era is moderating.
According to new data from Wall Street’s top prime brokerages (Goldman Sachs, JPMorgan, BNP Paribas), hedge funds have spent the last year quietly diversifying away from North America. Faced with trade tensions, policy uncertainty, and a weaker US Dollar, managers are unwinding the extreme concentration that defined the post-pandemic market.
📉 THE DATA SHIFT:
- North America: Net allocators adding to the region dropped to 23% in 2025 (down significantly from 39% in 2024), per BNP Paribas.
- Asia: The biggest winner. Allocations were up 13% at the start of this year (vs. 7% last year), following the region’s top performance in 2025.
- Europe: The most sought-after region in 2025, with 30% of allocators adding exposure.
🐻 MEGACAP FATIGUE: The “Magnificent Seven” serve as the bellwether for this rotation. JPMorgan reports that long/short funds have sold down positions in these tech giants over the past three months, bringing holdings down from historical highs to near-average levels. The crowded trade is unwinding.
⚖️ STRUCTURAL OR TACTICAL? Bruno Schneller (Erlen Capital) notes this feels more “structural than tactical.” The US is facing a maturing earnings cycle and fiscal concerns that raise the bar for adding risk. However, bulls argue this is just a trim, not an exit. As Mario Unali (Kairos Partners) puts it: “If you look at where investors want to put their money [long-term], everything points to the U.S.” due to dominance in AI, defense, and pharma.
💡 ANALYST TAKEAWAY: We are witnessing the end of “US Exceptionalism” as the only game in town. A weaker dollar is forcing allocators to hunt for alpha in neglected geographies like Japan and Europe. This isn’t a bearish bet on America; it’s a return to portfolio sanity. The free lunch of simply holding the S&P 500 is over; stock picking across borders is back.
👇 Fund Managers: Are you actively increasing exposure to Asia/Europe, or is the US still the best house in a bad neighborhood?