Pension funds in Denmark are under government pressure to invest more at home, with some reassessing their US exposure amid concerns over financial stability and geopolitical tensions. AkademikerPension and PFA recently cut their holdings of US Treasuries, for instance.

Similarly, investors across Europe and beyond are considering – or undertaking – their own action. President Donald Trump’s threats to seize Danish-ruled Greenland, though, are of particular relevance to Copenhagen.

Decisions like these cannot be taken lightly or quickly, as Menno van den Elsaker of Dutch pension giant APG said last year. This top-down pressure on investment teams creates a tricky dilemma, as a Europe-based private equity investor and a Danish pension fund executive told Private Equity International this week.

While the drive for more domestic investment – initially in defence and now more broadly – is state-driven, it appears to be the pension scheme boards pushing for potential cuts in US allocations.

Such discussions were already happening last year and sharply ramped up – in Denmark at least – when Trump restarted his rhetoric on Greenland, the Danish pension executive told PEI. The aggressive US moves “rattled” the Danes, he added, triggering more discussions about American exposure within asset portfolios.

However, having to trim exposure to what remains the biggest and most mature private equity market would not typically be the preference of investors. It may not be in the fiduciary interests of pension members, either.

Of course, one may feel doing so is justified from a risk management perspective, in light of concerns over American economic, political and regulatory uncertainty. It’s with that in mind that German family office Perpetual expects to sharply reduce its investment into US infrastructure.

In any case, assuming Danish or other LPs proceed to shift their focus away from the US, execution on that decision is neither simple nor fast. Adjusting public market portfolios will have a more immediate and arguably bigger impact.

It takes time to implement changes to unlisted asset exposure, and it is likely they will be gradual, marginal and won’t have an impact until Trump’s term is long finished.

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