UK pension schemes’ exposure to US assets has become an “increasingly uncomfortable contradiction” for trustees, Isio chief investment officer, Barry Jones, has said.

In a statement marking the anniversary of President, Donald Trump’s, second inauguration, Jones noted that the US market represented the majority of global equity market opportunity and continued to deliver strong returns.

However, aspects of the political and regulatory direction of the US administration over the past year were sitting uneasily with the environmental, social, and governance (ESG) beliefs that many schemes have formally adopted in recent years, he added.

"Markets have remained remarkably calm in the face of significant geopolitical developments, and from a purely financial perspective there are clear tailwinds for US corporates,” Jones stated.

“Pro-business policies, fiscal support and capital incentives all strengthen the investment case. But fiduciary duty does not exist in isolation from the beliefs and frameworks trustees have committed to on behalf of members.”

Jones believed the challenge was that walking away from US assets was not realistic, as its scale meant that excluding them altogether would materially reshape portfolios and reduce diversification.

Trustees were therefore being forced to think more carefully about how ESG principles were applied in practice, rather than relying on broad assumptions that were applicable in a more stable global landscape.

“This is less about making dramatic allocation shifts and more about reassessing trade-offs,” Jones said.

“Trustees need to be clear-eyed about where engagement, selective exposure or tilting can genuinely align portfolios with ESG objectives, and where tensions may need to be acknowledged rather than avoided.

“The US may be too big to ignore, but it is also too important not to scrutinise."

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