Fund managers believe Donald Trump’s trade tariffs will be reintroduced, affecting their outlook for the US.
In the past six months, managers have switched their views on whether the US index would perform well.
Quilter’s latest survey of global fund managers showed 80 per cent believe tariffs will be partially introduced when the 90 day pause expires in July, with 13 per cent expecting them to be largely brought back.
Asset managers also shared their views on where they think the trade war is likely to spill over, with three quarters saying it was somewhat or highly likely the EU would retaliate.
Overall, the negative sentiment is impacting investor expectations for the US economy with a third of those surveyed thinking the US will deliver less than 1 per cent of GDP growth in 2025.
At the end of 2024, fund managers predicted the US would be the best performer, and the EU the worst, when it comes to index returns.
However, six months on the latest Quilter survey shows the US is expected to have the worst returns from more than half of respondents, with 44 per cent thinking the EU will have the best returns.
Lindsay James, investment strategist at Quilter, said: “President Trump has clearly been prepared, or forced, to listen to markets, and fund groups are expecting this will translate into a better programme of tariffs compared to April 2.
“But he also will not want a repeat of his backtracking. As ever with the current US administration, the only certainty is uncertainty, and that in itself is not good for markets.”
For this reason, James said the results of the survey were not surprising.
She added: “White House policies have been pinpointed by fund groups as the cause for sentiment in the US to swing so dramatically in a negative direction.
“Whilst many have sought to tread carefully to avoid overt criticism of the recent policies, the investment community is in widespread agreement that the current approach is damaging on many fronts.”
tara.o’connor@ft.com
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