UK's Largest Pension Fund Cuts US Stock Exposure, Shifts to Europe and Asia
Claire Weston
B2C, managing £120 billion in UK local-government pensions, is trimming US listed holdings by 5%–10% and redirecting to Europe and Asia — its CIO says the concentration risk from a handful of Silicon Valley giants has grown "uncomfortable."
Why cut US equities now?
Border to Coast Pensions Partnership (B2C) manages roughly £120 billion (about $161 billion) in UK local-government pension assets — the country's largest pension asset owner.
CIO Joe McDonnell told the Reuters London investment conference that a handful of Silicon Valley tech giants now dominate US listed markets, creating concentration risk he called "very large."
This means → if those few names stumble, the entire US equity book takes the hit. B2C is cutting US listed exposure by 5% to 10%, redeploying into Europe and Asia.
Listed stocks cut — but private assets still favoured?
McDonnell drew a clear line: listed US equities are being trimmed, while US private assets remain attractive.
This means → B2C is not bearish on the US economy broadly; it sees the risk-reward of the public market as skewed by top-heavy concentration.
In plain terms = the public-market basket has too few eggs in it, but the US private-market side still holds underpriced opportunities.
Why refuse to co-invest with retail in private credit?
B2C will not participate in private-credit funds that also target wealthy retail investors.
McDonnell cited two concerns: ① mass retail redemptions can trigger liquidity swings; ② several high-profile funds have already shown slipping lending standards.
His words: "I don't want to be co-lending or co-investing with retail investors… I don't want to be destabilised by that."
How long will private-equity redemption pressure last?
Switzerland's Partners Group recently imposed redemption gates on an $8.6 billion private-equity fund — a warning sign for the sector.
McDonnell's view: listed private-equity managers will stay under pressure, but if the economy avoids a material downturn, market "noise" should fade within six to nine months.
This reflects how long-duration pension capital reads short-term volatility — tolerable, as long as fundamentals hold.
Content is for reference only, not financial advice.