Dutch and Italian funds cut hurricane-exposed US equities
Institutional investors in Italy and the Netherlands reduced their holdings of US equities exposed to major hurricanes between 2020 and 2023, according to a joint study by Banca d’Italia and De Nederlandsche Bank researchers.
Pension funds abandon equity shelter
Examining seven major US hurricanes between 2020 and 2023, researchers tracked security holdings across Italian and Dutch institutions.
Affected US firms suffered sales declines between 1.35 percent and 4.52 percent alongside sharp equity downturns.
Dutch pension funds primarily drove the observed divestment, reducing hurricane-exposed equity positions by 5.18 percentage points at the intensive margin while reallocating capital toward unaffected US corporate bonds, which rose by 1.70 percentage points.
In contrast, Italian investment funds cut exposed equity holdings by 4.38 percentage points with no meaningful fixed-income response.
Bond holdings among Dutch pension funds remained stable throughout the disruption.
Cross-asset divergence and structural bias
Portfolio adjustments diverged across institutional classes.
Dutch investment funds pursued tactical trading by reducing unaffected equity holdings by 2.77 percent while cutting hurricane-exposed bond positions by 1.67 percentage points.
Italian portfolios experienced muted bond trading due to structural allocations: Italian investors held six percentage points less in vulnerable chemical equities and two percentage points less in oil and gas bonds than Dutch peers, insulating their debt books from physical storm damage.
The myth of patient capital
The findings dismantle the assumption that long-term funds stabilize markets during localized climate shocks.
By dumping exposed equities instead of rebalancing, pension managers amplify price declines across foreign exchanges.
Supervisors cannot assume extended horizons prevent cross-border liquidation.