Every action of SPDR S&P 500 ETF Trust (NYSEMKT: SPY) you own, and every Treasury bond in your retirement account, exist within a market that foreign investors have filled with more than $35 trillion in capital. That figure, according to the U.S. Treasury’s most recent annual survey released in June 2025, is up from about $31 trillion a year earlier.
Fundamentally, the growth or decline of that fund indicates (very roughly) the extent to which the rest of the world trusts and is attracted to the US financial system. Recently, that confidence has come under scrutiny. Let’s look at what’s really happening and investigate why it’s important to your portfolio.
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When a pension fund in Amsterdam or a sovereign wealth fund in Abu Dhabi buys American stocks and bonds, it is making an implicit bet that the American economy will continue to grow and that the country’s institutions will remain stable.
For decades, that bet paid off. Measured through the total performance of the iShares Core MSCI Total International Stock Market ETF (NASDAQ: IXUS) and the SPDR S&P 500 ETF Trust, the US market grew 276% in the last 10 years, while the international market grew only 139%.
Then came April 2025. The Trump administration’s tariff policies sparked many murmurs about an ongoing “Sell America” ​​trade, causing a simultaneous drop in U.S. stocks, Treasuries, and the dollar. But foreign private investors, who account for more than 80% of foreign holdings, actually increased their net purchases of U.S. securities to about $1.5 trillion in 2025, up from an average of about $1 trillion a year between 2022 and 2024.
In other words, even during a period of unexpectedly erratic governance in the United States, foreign investors were not divesting their holdings, but rather accumulating. Of course, they may not always behave the same way; Patience has limits.
For now, US financial markets remain the best positioned for growth in the world. However, there are many factors that could change that and encourage international investors to allocate their capital elsewhere.
For example, increasing levels of state ownership of key companies, political corruption, weak enforcement of securities laws, and political instability have historically encouraged investors to move their capital out of countries. To the extent investors are concerned about this happening in the United States, it would be a new drag on domestic stock prices.