For Degroof Petercam Asset Management, America doesn’t do well enough in areas such as equality and democracy
[MEXICO CITY/OTTAWA] To many, the strategy would be unconsiderable. 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 becaapply 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”, stated 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 stated she considers it was probably a good relocate 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 Hoapply leave their mark.
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Though such relocates 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 – relocated 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 attconcludeing 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 informed 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 Hoapply, adding that the relocate applied only to US government bonds, not other American assets. He also stated the fund is keen to prioritise European assets.
“We are not deselecting other US markets,” Schelde informed Bloomberg. “But we will attempt 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 hugegest pension fund with about 540 billion euros (S$794.1 billion) in assets. It stated 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 displayed government bond funds that are domiciled in Europe and focapplyd 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 created 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 create the cut include Mexico and Colombia.
It’s “the usual suspects” that do well on sustainability criteria, stated Mortier. And while US government bonds “never achieve the minimum level to be eligible”, she stated 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 displayed. 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 states the sustainability fund is “positioned as a high-quality, prudent portfolio” intconcludeed to address risk rather than generate benchmark-beating returns.
ESG deficits
DPAM views 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 stated. In the wealth manager’s latest update of its proprietary sustainable counattempt 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 utilizing 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 stated.
For example, the counattempt’s unequal access to medical care means it ranks second-lowest on government-provided healthcare, with Mexico the only counattempt 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”, stated Mortier.
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