Most of these numbers are reported in market value, not net new purchases. U.S. equities massively outperformed over the last few years, and for long stretches the dollar was strong. Those two forces alone inflate the value of existing foreign holdings. Even if Europeans barely bought anything new, the same shares they already owned would still look much larger on paper.

That distinction matters, because rising exposure isn’t the same thing as rising conviction.

Why This Still Holds Even With A Weaker Dollar Now

This is where people get tripped up. Yes, the dollar has weakened recently and EUR/USD is higher over the past year. But the surge in reported European holdings didn’t happen overnight. It accumulated over multiple years that included long periods of U.S. equity outperformance and earlier dollar strength.

Those valuation gains don’t disappear just because the dollar softens later. Unless assets are sold, the level effect remains. So a falling DXY today doesn’t contradict the story..it just tells you the next leg of returns may look different.

This Isn’t Just About Chasing Returns

U.S. tech and AI crushed European equities. That’s the obvious part. But the quieter driver is that Europe hasn’t given its own capital many compelling alternatives. Energy costs stayed high after the Ukraine shock. Regulation keeps stacking up. Demographics are getting worse, not better. Growth feels capped before it even starts.

So money drifts. Not dramatically. Not ideologically. It drifts toward the place where earnings grow, liquidity is deep, and exits are easy. That’s less a vote for America than a shrug about Europe.

The Plumbing Matters More Than People Think

Another thing that gets missed..a lot of this European ownership runs through funds, custodians, and legal structures in places like Ireland, Luxembourg, or London. That doesn’t always mean European households or governments are the real decision makers. It’s global money wearing a European label.

Which makes the idea that Europe could suddenly dump U.S. equities way overplayed. There’s no red button.

The Real Lever Is Currency Risk, Not Selling

If something shifts, it probably won’t start with mass selling. It’ll start with hedging. For European investors, owning U.S. stocks often also means owning dollars, sometimes unintentionally. When hedging is expensive, they stay unhedged. When the math changes, they adjust.

Those quiet changes in hedge ratios can move FX markets and risk premiums long before anyone talks about selling stocks.

What This Actually Says About The System

At a deeper level, this is about gravity. Global portfolios follow benchmarks. Benchmarks follow market cap. And market cap followed the U.S. That creates a self reinforcing loop where capital concentrates even if no one feels especially bullish.

The real risk isn’t that Europe suddenly leaves. It’s that the marginal buyer slowly fades. Returns flatten, hedges rise, and the U.S. equity risk premium has to do more work on its own.

That’s not a crash story. It’s a regime change story.

My View

This isn’t Europeans making a loud bet on America. It’s global capital responding to performance, structure, and habit. If anything, it’s a quiet signal of how narrow the global growth menu has become.

And those situations rarely end with fireworks. They end with slow shifts that only look obvious in hindsight.