Several pension funds in the U.K., which manage assets exceeding £200 billion on behalf of millions of savers, are cutting their exposure to U.S. stocks amid rising concerns over a potential bubble in the U.S. artificial intelligence (AI) sector. Over recent months, these funds have pivoted their investments toward non-U.S. markets or strengthened safeguards against a possible downturn in U.S. equities.

Defined contribution pensions are particularly susceptible to stock market volatility, as younger savers often have a significant portion of their portfolios invested in U.S. stock indices. In response to these risks, Standard Life Investments has reduced its allocation to U.S. equities and increased investments in U.K. and Asian markets. Currently, around 60% of the stock assets in its Sustainable Multi-Asset Fund are based in North America.

Meanwhile, the Aon Master Trust divested approximately £700 million worth of assets from its global equity portfolio this summer, with a substantial portion coming from U.S. stocks. This move reflects a broader trend among U.K. pension funds seeking to mitigate risks associated with potential overvaluation in the U.S. market, particularly in the high-flying AI sector.