Investing & Performance | 3 April 2025
US TARIFFS: KEEPING A LONG-TERM PERSPECTIVE
The data still shows solid economic growth that we expect to support investing.

Fahad Kamal, Chief Investment Officer
Yesterday’s far-reaching US tariff announcements have caused stock market falls today. But we still see significant signs of solid economic growth that we expect to support markets over the long term.
While periods of market volatility can be uncomfortable, we believe it’s important to stay focused on an extended time horizon. On that front, we still see positive signals within the economy and markets. For now, our base case – based on hard data – remains one of ongoing growth.
reasons behind our thinking include
“The global economy remains in a slowdown regime, but it continues to grow. And while recent developments have increased the risk of a US recession, that’s still not something we expect. Over time, slowdown periods have typically proved relatively positive for equity markets in the past.”
Fahad Kamal, Chief Investment Officer
Fahad Kamal, Chief Investment Officer at Coutts, says: “The global economy remains in a slowdown regime, but it continues to grow. And while recent developments have increased the risk of a US recession, that’s still not something we expect. Over time, slowdown periods have typically proved relatively positive for equity markets in the past.
“We will see further volatility in markets for the time being. But overall, both US household and company balance sheets are robust. They will be impacted by these tariffs and current uncertainty, but we think they are well-equipped to absorb the changes.”
Past performance should not be taken as a guide to future performance. The value of investments, and the income from them, can fall as well as rise and you may not get back what you put in. You should continue to hold cash for your short-term needs.
Diversity and opportunity – how we manage your money
In light of the current, still positive economic outlook, we remain pro-equity investing with an overweight position in global stocks. But for us, diversification is key for these more challenging times in markets. It is a powerful investment tool for helping to cushion our clients’ investments from the worst of market falls.
Our multi-asset strategies are diversified in a number of ways:

Stocks and bonds
We have a full weight to US Treasuries and hold other high quality bonds to help mitigate stock market falls. This has supported our strategies, with US government bonds up 2.9%, according to Bloomberg, at the end of the first quarter of this year (as of 31 March).

Regions and sectors
We invest across a wide range of regions and sectors to help mitigate risks. Within the UK, for example, we use a fund manager equipped to seize opportunities across the whole market – whether they come from large multi-nationals or smaller mid-caps.

Currency
We have found sterling to be undervalued, and therefore increased our exposure to sterling-denominated assets earlier this year. This has diversified our holdings further, and benefitted our investments as sterling is up 5% on the dollar since January (as of 3 April).

Liquid alternatives
We hold a proprietary fund which accesses over 15 ‘liquid alternative’ investment strategies to help diversify our holdings beyond traditional bonds. It focuses on areas with low sensitivity to traditional stock and bond markets, and aims to generate stable returns regardless of whether those markets rise or fall.
Seeking opportunity
Such times in markets are not without opportunity, and our active fund managers are watching closely for chances to buy assets at a good price.
Our analysis suggests that, historically, buying when uncertainty is high could potentially result in higher returns over the following 12 months. Since 1990, when the Volatility Index (VIX) has been above 25 – as it is today – the total return of US equities in the following 12 months has averaged 16%, compared to 11% when it was below 25.
“Corrections like the one we’re seeing today are a ‘normal’ part of investing,” says Fahad. “That doesn’t make them any more palatable, but they do tend to occur every 12 to 18 months.
“The important point is that markets usually tend to find a way through them. As long as you have an extended time horizon as an investor, you could achieve your investment goals for the future.”
He adds: “We will keep a close eye on developments and stand ready to adjust our holdings accordingly should it become necessary. But we are long-term investors and we do not engage in knee-jerk reactions. As of right now, we see no reason to change our current positioning.”
Speak to us
If you are a Coutts client and would like to discuss current market developments or your own investments with us in more detail, please contact your private banker.
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