Mercer Reveals Massive Client Exodus from U.S. Markets - Here’s Where the Smart Money’s Heading

Wall Street's losing its grip as institutional giants pivot hard away from traditional U.S. holdings. Mercer's latest data shows a tectonic shift in portfolio allocation that's rewriting the playbook for wealth preservation.

The Great Diversification

Clients aren't just dipping toes—they're diving headfirst into alternative assets. Real estate, private equity, and yes, digital currencies are soaking up capital that once automatically flowed stateside. The old 60/40 portfolio? Looks downright archaic now.

Global Realignment Accelerates

Geopolitical tensions, inflation concerns, and frankly—better returns elsewhere—are driving this capital migration. Smart money doesn't wait for recessions to protect itself; it moves before the herd even smells trouble.

Future-Proofing Portfolios

This isn't panic—it's precision. Institutions are building all-weather portfolios that can withstand Fed policy whiplash and political uncertainty. Because nothing says 'mature investment strategy' like reducing exposure to a single economy—even if it's America's.

Because sometimes the best trade is the one Wall Street hasn't figured out yet—but your competitor's already executing.

Where the money is going

Trump’s repeated criticism of Chair Jerome Powell, saying he has been slow to lower borrowing costs, along with the president’s MOVE to fire Governor Lisa Cook, is further encouraging clients to step back from the U.S., according to Kaveh. “The politicization of the Fed is putting the Fed in the corner,” he noted. “The single-minded focus on inflation and employment now is being blurred. It’s not good news. It does advocate for diversification.”

Mercer sees clients increasing allocations to stocks in Europe and Japan, where prices are viewed as more appealing relative to the U.S. The firm is also seeing steady interest in private markets, including venture funds tied to the artificial-intelligence build-out. “The majority of our clients seem to think that AI will be a very significant driver of the macro environment over the next five-to-10 years,” Kaveh said.

Trump’s attacks on Powell blamed for market jitters

Adding to the debate, Bundesbank President Joachim Nagel on Wednesday warned that curbing the U.S. central bank’s independence could backfire, lifting long-term borrowing costs and inviting similar political pressure elsewhere. TRUMP has stepped up demands for aggressive rate cuts, sought to dismiss a Federal Reserve governor and is weighing whether to replace Powell.

“If the Fed’s independence were to be permanently undermined politically, the consequences WOULD be serious,” Nagel said in Frankfurt.

“This would endanger the economic and financial stability and prosperity of the U.S.” He praised Powell’s handling of the confrontation but cautioned that any doubt about the Fed’s commitment to price stability could push yields higher at the long end of the curve, even if policymakers cut rates at the short end.

“There were indications that the attacks on the Fed contributed to a steeper U.S. yield curve on corresponding trading days: lower yields at the short end and higher yields at the long end,” Nagel said. “This shows that the financial markets certainly understand the importance of central bank independence.”

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