Sovereign investors pivot to energy, gold as dollar fears deepen

Sovereign wealth funds and central banks overseeing $29 trillion in assets are making a decisive shift toward energy investments while raising deepening concerns about the U.S. dollar's long-term reserve status, according to Invesco's ↘ 2.64% annual Global Sovereign Asset Management Study published Monday.

Energy as the New Anchor

The survey of 90 sovereign wealth funds and 54 central banks found that 80% of respondents identified energy security and energy transition infrastructure as the most credible investments for building portfolio resilience, Reuters reported. Infrastructure now accounts for 9% of sovereign wealth fund assets in 2026.kfgo+1

The appeal of energy assets has been amplified by the race to build power-hungry AI infrastructure, and by a broader rethinking of diversification in an era of trade tariffs, closed shipping channels, and ongoing wars in Ukraine and the Middle East.kfgo

"In a world of inflation shocks, geopolitical fragmentation and more concentrated markets, investors are rethinking old assumptions about diversification and redesigning portfolios to withstand a wider range of outcomes," Invesco head of research Benjamin Jones said. "Resilience is becoming a hard requirement, not a nice-to-have."kfgo

Dollar Doubts and the Gold Hedge

Concerns about the dollar were described as "widespread and deepening." Some 61% of central banks said U.S. debt levels negatively impact the dollar's long-term reserve status — a sharp increase from 20% in 2024. Meanwhile, 29% of respondents said the dollar's reserve-currency status will be weaker in five years, up from 12% in 2022.wtvbam+2

Several institutions reported reviewing their reliance on U.S.-based custodians and clearing infrastructure. One European central bank said it had already replaced its U.S. custodian, while a Latin American central bank said it was establishing non-U.S. custodial relationships to prepare for a "worst-case scenario".kfgo

One-third of those surveyed said they plan to increase gold holdings as part of the diversification drive. The positive bond-equity correlation in recent years has eroded traditional fixed-income diversification, pushing sovereign allocators toward real assets including gold and infrastructure.investinglive+1

Private Markets Gain Ground

The shift extends beyond energy. Sovereign wealth funds are increasingly moving from public equities into private credit, private equity, and infrastructure, a trend confirmed by multiple industry studies. According to State Street ↘ 1.47%, average private-market exposure among sovereign funds rose from about 25% in 2020 to nearly 30% by the end of 2025.ssga+1

The lack of a credible dollar alternative means any shift away from the currency will likely remain incremental. But as one central bank respondent warned, even the act of diversifying custody arrangements "could be interpreted as hostile by the U.S."kfgo