National funds have started pulling money out of stocks. Are big tech companies and a broken market to blame?

Sovereign wealth funds and central banks, with assets totaling $29 trillion, are planning to significantly reduce the share of stocks in their portfolios, according to Invesco. The rapid development of artificial intelligence has reshaped financial markets: major investors are shifting funds from overvalued stocks of tech giants to AI infrastructure, private equity, and gold.

This year has seen a shift in sentiment away from stocks, according to the Financial Times (FT), citing Josette Rizk, head of Invesco’s Middle East and Africa division. According to a survey of 90 sovereign wealth funds and 54 central banks conducted by Invesco in the first quarter of 2026, the share of stocks in their portfolios fell to 30% in 2026 from 32% a year earlier.

Nearly one-fifth of the funds surveyed—17%—plan to continue reducing their holdings of publicly traded stocks this year. At the same time, 28% of respondents intend to increase their investments in private credit funds and stakes in private companies, while 35% plan to invest in infrastructure, according to Bloomberg.

The flight of “smart money” from stocks is driven by a combination of macroeconomic shocks and several structural factors: the risk of concentration due to AI, the breakdown of traditional hedging mechanisms, and a shift in the approach to investing during the tech boom, according to Invesco:

— The artificial intelligence boom has made the stock market dangerously dependent on a small group of companies. The weight of the ten largest issuers in the S&P 500 has doubled over the past decade, reaching 38%—largely thanks to the rally of the “Magnificent Seven” tech giants, notes the FT. According to Rizk of Invesco, funds have begun to complain that passive index strategies no longer provide real diversification.

— The inflation shock of 2021–2022 disrupted the usual inverse correlation between stocks and bonds. Now these securities often fall in tandem, depriving portfolios of protection. The classic pairing of these assets in a portfolio no longer guarantees stability, noted Invesco analyst Benjamin Jones.

— Instead of buying overvalued stocks on the stock market, funds have begun investing directly in AI infrastructure: the construction of data centers and power sources for them. Capital is flowing into infrastructure and private credit, while demand for passive market investments is growing, Jones concluded.

The lower liquidity of non-public assets suits sovereign wealth funds due to their long investment horizons. Such instruments are revalued less frequently, making it easier for institutional investors to hold them for the long term, according to Bloomberg. Central banks, for their part, are turning to gold: more than a third of them want to increase their gold holdings as a hedge against inflation and market turbulence, the agency adds.

The current challenges facing the private credit sector have not deterred them: sovereign wealth funds have largely ignored the fact that this year, investment firms such as Blue Owl, Apollo, Ares, BlackRock, and Blackstone restricted redemptions due to a sharp rise in redemption requests, the FT notes.

This article was AI-translated and verified by a human editor