Miranda Seath, Director of Market Insights at the Investment Association, has shared her thoughts on President Trump’s decision on tariffs.
“There was a flood of money into US equity funds in 2024, fuelled by strong performance. At the end of last year, following Trump’s election win, the Republican Party’s domestic growth and pro-markets agenda helped to boost net retail sales to £590 million into North American equities in November according to IA sector data.
“The complex global trade environment has dominated the first quarter of 2025, and the S&P 500 dropped almost 5% last week after Trump’s ‘Liberation Day’ announcement of sweeping global tariffs.
“Many investors will now be thinking about their levels of exposure to the US markets. When markets are turbulent, diversification is a critical tool to manage risk. If you’re investing in a global equity fund it’s worth having a look at what proportion of that fund is invested in American companies, because you may have more money in the US than you think. Over the next few months, we can expect to see investors looking at other opportunities, potentially in Europe, or even in the UK.
“We have also seen money coming into well diversified Mixed Asset funds, which invest in a mixture of stocks and bonds. These funds saw a £409 million inflow in February, the highest since January 2023 (£493 million). Investors may also want to manage their risk by increasing their investment in bonds.
“At the moment, the only certainty seems to be uncertainty – but that isn’t always bad for returns. When you see volatile markets there can be some interesting investment opportunities. We know investors will be looking at how to navigate today’s uncertain markets, but markets run in cycles, so it’s important to remember that investing is for the long-term.”
