Amid increasing concerns about the dollar, the latest report from the investment management firm Invesco says sovereign wealth funds and central banks managing USD 29 trillion in assets are turning to energy assets as they undertake a portfolio reassessment driven by unprecedented geopolitical shifts emerging in the Middle East due to the Iran war.
The survey, in which 90 sovereign wealth funds and 54 central banks participated, showed an increasing focus on diversification and investment portfolios that can “take a hit and still hold it together” amid trade tariffs, closed shipping channels, and wars in Ukraine and the Middle East.
Some 80% of the surveyed entities said energy security and energy transition infrastructure were the most credible investments for keeping their portfolios resilient, while infrastructure reached 9% of sovereign wealth fund assets in 2026.
“The race to build energy-hungry AI infrastructure added to the appeal,” the Invesco report noted.
In a world of inflation shocks, geopolitical fragmentation, and more concentrated markets, investors are rethinking old assumptions about diversification and redesigning portfolios to withstand a wider range of outcomes. Resilience is becoming a hard requirement, not a nice-to-have,” Invesco head of research Benjamin Jones said.
“The positive bond-equity correlation in recent years has also eroded reliance on bonds for diversification, with more focusing on liquidity and real assets,” he added further.
“Concerns about the dollar were widespread and deepening, and 61% of central banks polled also said that U.S. debt levels negatively impact the dollar’s long-term position as a reserve asset, up from 20% in 2024,” Invesco noted.
While the Iran war has helped lift the dollar 3% in 2026, analysts say policy uncertainty from the Donald Trump administration, along with Uncle Sam’s high debt, would result in the currency weakening over the long term.
“The lack of a credible dollar alternative is likely to make any shift away from it incremental, but 29% of those in the Invesco survey said the dollar’s reserve-currency status will be weaker in five years, up from 12% in 2022,” the report said.
Financial institutions are also reportedly reviewing their reliance on US-based custodians, counterparties, and clearing infrastructure due to geopolitical tensions.
“One European central bank said it had already replaced its US custodian. A Latin American central bank said it was setting up new non-US custodial relationships to prepare for a worst-case scenario,” Invesco remarked.
Last but not least, one-third of the surveyed entities said they intended to boost gold holdings as part of the diversification trend.