UK pension schemes managing more than £200bn in assets are trimming their exposure to US equities, reflecting growing unease over the dominance of a handful of large technology companies and the risk of an overheating AI sector.
The shift comes as the tech-heavy Nasdaq Composite has risen more than 20% this year and more than doubled since early 2023, fuelled by the so-called “Magnificent Seven” stocks, including Nvidia, Alphabet and Meta. Their surging valuations have sparked concerns that millions of retirement savers could be vulnerable to a sharp correction.
Standard Life, which oversees the £36bn Sustainable Multi Asset fund for two million members, is among those reducing US holdings. Callum Stewart, head of investment proposition, said the group was boosting exposure to UK and Asian markets in response to risks linked to trade tensions and the concentration of returns in a small number of US tech giants.
The UK’s defined contribution pension system, where younger savers typically have 70–100% of assets in global equities, is particularly sensitive to market swings. “Concentration in US tech, combined with historically high valuations, is drawing closer scrutiny,” said Neil Maines of adviser XPS.
Aon Master Trust, a £12bn scheme, sold around £700mn of global equities—largely US stocks—over the summer. Chief investment officer Jo Sharples said the move also allowed the fund to take advantage of opportunities in gilts, adding that concerns over a potential AI bubble were growing.
Other schemes are adopting protective measures rather than selling. Fidelity’s £23.9bn FutureWise fund has shifted towards more stable US companies, added gold as a hedge and shortened bond duration. Nest, the £58bn state-backed provider, has opted to channel new contributions into private markets while gradually diversifying away from Big Tech.
Global authorities, including the ECB, Bank of England and IMF, have issued recent warnings about stretched valuations across US technology names. Still, some managers remain reluctant to cut exposure given the sector’s strong earnings, with Nvidia continuing to exceed expectations amid the global AI investment boom.
