The American president’s repeated statements about acquiring Greenland aren’t just diplomatic noise anymore. European leaders have moved from quiet concern to public opposition, with the Netherlands and other EU member states explicitly backing Denmark’s sovereignty. This isn’t just about Arctic territory anymore, it’s a stress test for the transatlantic alliance that could reshape how Europeans think about investing across the pond.
While the S&P 500 continues hitting record highs, many investors in the Netherlands and broader Europe are quietly asking: does my portfolio have too much America in it?
When Politics and Portfolios Collide
The timing couldn’t be more awkward. US markets are delivering some of their strongest performances in years, with the Dow Jones Industrial Average and S&P 500 reaching fresh records even as geopolitical tensions mount. This creates a classic investor dilemma: do you chase returns in a market that looks increasingly expensive and politically unstable, or do you prioritize geographic safety?
Many European retail investors hold between 40-60% of their equity exposure in US assets, often through global ETFs that are heavily weighted toward American tech giants. This concentration made sense during the era of stable US-EU relations. It makes considerably less sense when European leaders are openly discussing strategic autonomy and diversifying away from American economic influence.
The research consensus among Dutch investment communities shows a clear split. Some argue geopolitical noise is just that, noise. They point to historical precedents: the Vietnam War, 9/11, the Iraq invasion, even the pandemic. Markets eventually climbed higher through all of them. This camp believes selling US assets now would be a classic case of letting politics poison a sound investment strategy.
The counterargument is gaining traction, though. Geopolitical risk isn’t just about military conflict anymore. It’s about trade policy unpredictability, technology restrictions, currency weaponization, and the slow erosion of multilateral institutions that have underpinned global markets for decades.
The EU’s Quiet Pivot Away from US Dependence
While headlines focus on Greenland, Brussels has been executing a more substantive strategic shift. The EU’s approval of the Mercosur trade agreement with South American nations after 25 years of negotiations signals a clear intent: reduce dependence on both the US and China by building alternative trade corridors.
This isn’t theoretical. The deal gives European manufacturers preferential access to 260 million consumers in Brazil, Argentina, Uruguay, and Paraguay while securing supply chains for critical materials like lithium, essential for Europe’s green transition. For European companies, this translates into tangible growth opportunities that aren’t subject to Washington’s political whims.
The Dutch government, long skeptical of the Mercosur deal over environmental concerns, recently shifted to support it. This policy U-turn reflects a broader European calculation: economic diversification now outweighs other concerns. When even traditionally cautious countries like the Netherlands prioritize strategic autonomy, the message to investors should be clear.
What the Data Actually Shows
Market performance data reveals a telling pattern. While US indices surge, European markets have quietly strengthened. The AEX (Amsterdam Exchange Index) and broader Euro Stoxx 50 have shown resilience, with European indices benefiting from lower valuations and improving fundamentals. The ECB’s pivot toward rate cuts provides additional support that the Federal Reserve may not be able to match if inflation resurfaces.
European sectors that typically weather geopolitical storms are showing particular strength. Banks, insurers, telecom operators, food producers, real estate companies, and energy firms offer something their US counterparts often don’t: attractive dividends and lower sensitivity to tech sector volatility. An Amundi Stoxx 600 tracker outperformed an iShares S&P 500 equivalent in recent periods, suggesting the valuation gap is finally narrowing.
Rebalancing Without Panic
The question isn’t whether to abandon US markets entirely, that would be extreme. The question is whether your portfolio’s geographic allocation reflects the new geopolitical reality.
For Dutch investors using platforms like DeGiro or Meesman, the adjustment can be straightforward. Consider these concrete steps:
- 1. Review your ETF composition. Many “global” funds are 60-70% US stocks. Look for ETFs with explicit European or developed market ex-US mandates. The Vanguard FTSE Developed Europe UCITS ETF or iShares Core MSCI Europe offer straightforward alternatives.
- 2. Sector rotation within Europe. The Reddit discussion highlighted specific European sectors that could benefit from reduced US exposure: European banks (ING Groep, ABN AMRO), insurers (Aegon), telecom (KPN, VodafoneZiggo), food (Unilever, Nestlé), and energy (Shell, TotalEnergies). These companies generate substantial revenue in stable domestic markets while offering dividend yields that cushion against volatility.
- 3. Currency considerations. A stronger dollar has boosted US returns for European investors, but this works both ways. If geopolitical tensions weaken the dollar or strengthen the euro, your US holdings face a headwind. Hedged share classes or natural eurozone exposure can mitigate this.
- 4. The real estate hedge. Dutch investors uniquely understand property as both shelter and investment. European real estate investment trusts (REITs) offer inflation-linked income streams less correlated with US tech stock performance.
The Dutch Tax Angle
Here’s where it gets particularly relevant for Netherlands-based investors. The Dutch tax system, specifically the Box 3 wealth tax (vermogensrendementsheffing), treats foreign investments the same as domestic ones. There’s no tax advantage to holding US over European assets.
However, currency fluctuations and geopolitical risk do affect your real returns. If US-EU tensions trigger a 10% euro appreciation against the dollar, your unhedged US portfolio loses that much in euro terms, before any market movements. The Belastingdienst (Tax Authority) won’t adjust your wealth tax for this “geopolitical haircut”, but your purchasing power certainly feels it.
Risk Management vs. Return Chasing
The core tension in the Reddit discussion boiled down to this: risk and return are inseparable. You can’t eliminate geopolitical risk without accepting potentially lower returns. But you can manage it.
European investors have historically underweighted their home continent due to perceived stagnation. That perception is outdated. European companies have adapted to higher energy costs, restructured supply chains, and maintained profitability. The ECB’s monetary policy is now more accommodative than the Fed’s, and fiscal stimulus in Germany is gathering momentum.
The geopolitical premium, the extra return investors demand for bearing political risk, is rising for US assets. European assets, by contrast, carry a geopolitical discount. That creates opportunity.
Concrete Action Steps
If you’re concerned about US-EU tensions affecting your portfolio, consider this measured approach:
- Start with diagnosis. Calculate your actual US exposure including indirect holdings through global funds. Many investors are surprised to find 50-70% of their equity risk tied to American politics.
- Phase, don’t flee. Reduce US weight by 10-15 percentage points over 3-6 months. Use monthly contributions to overweight European purchases rather than selling US winners and triggering capital gains.
- Focus on quality. European multinationals like ASML, LVMH, and Nestlé generate substantial non-European revenue while being domiciled in geopolitically stable jurisdictions. You get global growth exposure without US-specific political risk.
- Monitor the signals. Watch for three key indicators: further US escalation on Greenland or trade, concrete EU retaliation measures, and sustained outperformance of European indices. Any of these would warrant accelerating your rebalancing.
The Bottom Line
The Greenland situation won’t single-handedly crash US markets. But it represents something more significant: the end of the post-Cold War assumption that US and European interests are permanently aligned. For investors, that means geographic diversification isn’t just about spreading risk, it’s about acknowledging that the political underpinnings of global markets are shifting.
European markets offer reasonable valuations, improving fundamentals, and, crucially, less exposure to the specific geopolitical risks now emerging. The Dutch pension system’s gradual shift toward European assets over the past two years suggests institutional investors are already making this calculation.
Your portfolio doesn’t need to choose sides in a geopolitical dispute. But it should reflect the reality that the safest assumption of the past 30 years, American hegemony, is no longer something to bet your retirement on. The Mercosur deal, European defense initiatives, and the continent’s energy transition create a universe of investment opportunities that don’t require exposure to Washington’s increasingly unpredictable policy decisions.
The line between politics and portfolios has always been blurrier than economists admit. Right now, for European investors, it’s becoming impossible to ignore.