Global Sovereign Investors Turn to Energy Assets as Dollar Outlook Weakens

London, June 29: Sovereign wealth funds and central banks responsible for managing nearly $29 trillion in global assets are increasingly redirecting investments toward energy related assets while expressing growing concerns over the long-term outlook for the U.S. dollar, according to a new survey released by global investment management firm Invesco.

The survey, which gathered responses from 90 sovereign wealth funds and 54 central banks across the world, highlights a major shift in investment strategies as geopolitical tensions, trade disruptions and economic uncertainty reshape global financial markets.

Institutional investors indicated that protecting portfolios from unpredictable global events has become a top priority. Instead of relying on traditional investment models, many are adopting broader diversification strategies designed to withstand inflation, geopolitical shocks and supply-chain disruptions.

Energy infrastructure has emerged as one of the most attractive investment sectors. Around 80 percent of respondents identified energy security projects and energy transition infrastructure as the most reliable long-term investments for building resilient portfolios. Investments in infrastructure now account for nearly nine percent of sovereign wealth fund assets, reflecting growing confidence in real assets.

The report also notes that the rapid expansion of artificial intelligence has increased demand for electricity and digital infrastructure, making energy investments even more attractive. Data centres, power generation projects and transmission networks are expected to play an increasingly important role in institutional investment portfolios.

According to Invesco’s research team, investors are moving beyond traditional assumptions that balanced stock-and-bond portfolios can provide sufficient protection during periods of economic volatility. Instead, funds are focusing on assets capable of delivering stable returns during uncertain market conditions.

Another significant finding from the survey relates to confidence in the U.S. dollar. More than 60 percent of central banks surveyed believe rising U.S. government debt could weaken the dollar’s long-term role as the world’s leading reserve currency. This represents a sharp increase in concern compared with similar surveys conducted just two years earlier.

Although the dollar has remained relatively strong in recent months due to geopolitical developments and investor demand for safe-haven assets, reserve managers increasingly view long-term fiscal challenges and policy uncertainty as potential risks to the currency’s future dominance.

The survey suggests that most institutions are not planning an immediate departure from dollar-denominated assets. Instead, many are gradually expanding investments into alternative currencies, infrastructure, commodities and precious metals to reduce concentration risk.

Several central banks also revealed that they are reassessing their operational dependence on U.S.-based financial institutions. Some respondents reported reviewing custodial arrangements, payment systems and clearing infrastructure to improve resilience against geopolitical disruptions.

One European central bank indicated it had already shifted its custodial services outside the United States, while another institution from Latin America said it was establishing additional international partnerships as part of contingency planning for future geopolitical risks.

However, respondents acknowledged that reducing dependence on U.S. financial infrastructure remains a sensitive issue due to the central role played by the United States in global financial markets. Many institutions stressed that diversification would likely occur gradually rather than through rapid structural changes.

Gold has also regained prominence among institutional investors. Approximately one-third of surveyed organisations said they intend to increase gold holdings over the coming years as part of broader diversification strategies. Central banks continue to view gold as an important reserve asset capable of providing stability during periods of financial market volatility.

Market analysts believe the findings reflect a broader transformation in global investment thinking, where resilience, flexibility and long-term risk management are becoming as important as returns. Rising geopolitical tensions, conflicts in several regions and evolving trade relationships are encouraging major institutional investors to build portfolios that can better withstand future economic shocks.

The report concludes that sovereign wealth funds and central banks are entering a new phase of investment management in which energy security, infrastructure development and diversified reserve assets are expected to play a larger role in preserving long-term financial stability.