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The New Investment Landscape After US Tariff Hikes – UBS, Pictet, St James's Place
Amanda Cheesley
10 April 2025
After US President Donald Trump announced sweeping trade tariffs this month, causing China to retaliate, Cesar Perez Ruiz, chief investment officer at , favours a defensive stance on bonds. “While remaining generally positive on the asset class, we have been revisiting the stance on credit, particularly at the riskier end of the spectrum,” Onuekwusi said. “Although credit conditions still look good and defaults are not on the rise, the latter is a lagging indicator. This means any defensive positioning in this area must be proactive. The riskier end of the bond market also looks quite rich in terms of pricing. Eyeing the short end of the market, we’re exploring more defensive options in this space.” Within fixed income, Onuekwusi believes that it’s important to remain globally diversified to help insulate portfolios against policy decisions, which look increasingly unclear. Equities “Long before the tariffs pressure unravelled, the concentration of the US market was becoming concerning,” Onuekwusi continued. “Expensive and dominant, the seven largest companies – all tech-based – are close to extremes. If markets become more volatile from here, it’s these types of consensus trades that have done well over the last few years that are likely to be the most vulnerable.” “Meanwhile, Europe, led by Germany, appears to have much more positive momentum,” Onuekwusi said. “The German fiscal package announced in late March is the largest in a generation. This could increase European prospects considerably. Emerging market equities look attractive and may benefit from the stimulus package recently unveiled by China.” While uncertainty is rising, Onuekwusi believes it is important for investors not to stand still. He is positioning portfolios to remain resilient, with a greater focus on defensive assets and diversified opportunities outside the US. “As always, maintaining a long-term perspective is key – staying diversified through market cycles can help investors benefit from the opportunities that emerge along the way,” Onuekwusi concluded.
On equities, Onuekwusi is planning to increase regional equity allocations outside the US. “Leaning into diversification calls, equity holdings have moved towards UK equities, smaller companies, emerging markets and Japan,” he said. “The UK may still be lacklustre from a growth perspective, but it remains an attractive market right now for many reasons. The UK stock market itself is diverse but made up of large, defensive, value-oriented companies that look cheap from a valuation perspective. It is particularly light on technology companies, which instead dominate the US market. Tech is one of the more vulnerable areas in global markets, alongside the US dollar. It is the influence of the former that has them maintaining a wary and underweight position in the US market.”