US Treasuries aren’t a sustainable bet: Belgian wealth manager

[MEXICO CITY/OTTAWA] To many, the strategy would be unthinkable. But for almost two decades, a US$60 billion wealth manager in Belgium has been shunning US Treasuries.

For Degroof Petercam Asset Management (DPAM), Treasuries are not good enough for its flagship sustainable government bond fund because the US doesn’t score well enough on metrics such as equality and democracy. 

More recently, however, what started as a niche strategy in a single fund has spilt into other parts of DPAM. And this time, the concern isn’t sustainability; it’s the fear of financial losses.

The decision to cut US Treasuries from other parts of the wealth manager’s portfolio was based “more on valuation than anything else”, said Ophelie Mortier, DPAM’s chief sustainability officer. 

Mortier, a 15-year veteran of sustainable investing, declined to provide details of how much the wealth manager has sold, citing compliance concerns. But she said she thinks it was probably a good move to cut back on US Treasuries “in terms of valuation”.

Not the first

DPAM, which is majority-owned by France’s Credit Agricole, is the latest northern European investor to raise concerns over US government bonds as everything from fiscal bloat to tariffs and an erratic governance style in the White House leave their mark. 

Though such moves are a mere drop in the ocean in the context of the US$30 trillion US government bond market, they have managed on occasion to catch the attention of top-level US Cabinet members.

In January, a little-known pension fund based in Denmark – AkademikerPension – moved the market after letting it be known it was exiting a US Treasury portfolio worth just US$100 million.

US Treasury Secretary Scott Bessent, who was attending the World Economic Forum’s annual meeting in Davos at the time, sought to downplay the moment. “Denmark’s investments in US Treasury bonds, like Denmark itself, (are) irrelevant,” he told reporters.

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Anders Schelde, the chief investment officer of AkademikerPension, framed the decision to exit in the context of the policies being pushed by the Trump White House, adding that the move applied only to US government bonds, not other American assets. He also said the fund is keen to prioritise European assets.

“We are not deselecting other US markets,” Schelde told Bloomberg. “But we will try to select European investments more often, particularly with equities – both listed and unlisted – and critical sectors like energy, defence and the digital autonomy.”

Other institutional investors to have retreated from the US government bond market include Stichting Pensioenfonds, Europe’s biggest pension fund with about 540 billion euros (S$794.1 billion) in assets. It said in January it had cut its holdings of US Treasuries by about 10 billion euros last year to 19 billion euros.  

US bonds have served as a safe haven through most financial crises. But there are signs that European investors beyond just a handful of pension and wealth managers may be revisiting that assumption. 

Data compiled for Bloomberg by Morningstar Direct showed government bond funds that are domiciled in Europe and focused on US dollar-denominated strategies saw net outflows in 2025 and 2024, which was the first year for such redemptions since 2013. 

That speaks to a disconnect between how money managers on either side of the Atlantic are reading the current moment, with the Iran war adding to the growing sense of European unease.

Seeking prudence

At DPAM, countries whose bonds made it into the sustainable government bond fund include Spain, as well as northern European issuers such as Denmark and the Netherlands. Countries that, like the US, didn’t make the cut include Mexico and Colombia.

It’s “the usual suspects” that do well on sustainability criteria, said Mortier. And while US government bonds “never achieve the minimum level to be eligible”, she said this “should not be interpreted as an anti‑US stance”.

The strategy has come at a financial cost.

Since its inception in 2008, the DPAM L-Bonds Government Sustainable fund, which manages around 750 million euros, has delivered a total return of about 38 per cent, data compiled by Bloomberg showed. Over the same period, the Bloomberg US Treasury Total Return Index has added roughly 53 per cent, while the Bloomberg EM Local Currency Government TR Index is up about 62 per cent.

Mortier says the sustainability fund is “positioned as a high-quality, prudent portfolio” intended to address risk rather than generate benchmark-beating returns.

ESG deficits

DPAM looks at sustainability criteria for all 38 members of the Organisation for Economic Co-operation and Development (OECD). So far, the US has consistently hovered in the lower half of issuers, Mortier said. In the wealth manager’s latest update of its proprietary sustainable country model, the US even dropped five notches to 34th place.

America has long distinguished itself from many European countries through its decision not to ratify a number of international treaties. For example, it’s not a party to the International Criminal Court, the Ottawa Convention that seeks to ban anti-personnel landmines, and the Convention on Cluster Munitions.

What’s more, income inequality, measured using the Gini coefficient, is considerably higher in the US than in northern European countries on average.

When it comes to ranking countries with the greatest risk of strikes, riots and civil commotion (SRCC), the US is the No 1 Western democracy, and overall it sits at No 5, putting it ahead of Pakistan, Bangladesh and India, according to first-quarter data provided by Verisk Maplecroft. SRCC models take into account not just the risk of unrest, but also the cost of replacing property that is damaged.

In DPAM’s ranking of OECD issuers, the US is ahead on technology, education and even environmental innovation. But those strengths “are offset by persistent deficits in social equity and governance performance”, Mortier said.

For example, the country’s unequal access to medical care means it ranks second-lowest on government-provided healthcare, with Mexico the only country to have a worse score.

All in all, the US “presents an imbalanced sustainability profile” with an economy that has a “high innovation capacity and global influence” but that “underperforms in key environmental, social and governance dimensions”, said Mortier.