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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.
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According to data compiled for Bloomberg by Morningstar Direct, government bond funds that are domiciled in Europe and focused on dollar-denominated strategies saw net outflows in 2025 and 2024, which was the first year for such redemptions since 2013.
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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.
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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.
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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 says this “should not be interpreted as an anti‑US stance.”
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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, has delivered a total return of about 38%, according to data compiled by Bloomberg. Over the same period, the Bloomberg US Treasury Total Return Index has added roughly 53%, while the Bloomberg EM Local Currency Government TR Index is up about 62%.
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Mortier says the sustainability fund is “positioned as a high-quality, prudent portfolio” intended to address risk rather than generate benchmark-beating returns.
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DPAM looks at sustainability criteria for all 38 members of the Organisation for Economic Cooperation and Development and so far, the US has consistently hovered in the lower 50% 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.
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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, or the Ottawa Convention that seeks to ban anti-personnel landmines, or the Convention on Cluster Munitions. What’s more, income inequality, measured using the gini co-efficient, is considerably higher in the US than in northern European countries on average.
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When it comes to ranking countries with the greatest risk of strikes, riots and civil commotion, 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’s damaged.)
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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 health care, with Mexico the only country to have a worse score.
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All in all, the US “presents an imbalanced sustainability profile” with an economy that’s got a “high innovation capacity and global influence” but that “underperforms in key environmental, social and governance dimensions,” she said.
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English (US)