The global trade war will create divergence across the investment landscape. For instance, as the US seeks to reshore many jobs – including less-productive ones – will the productivity gains the US economy previously enjoyed be redistributed to other regions? 

As the new tariff regime plays out, our CIOs and portfolio managers across asset classes consider which geographies, industries or sectors they see benefitting or being disadvantaged by the Trump administration’s tariffs. In equities, fixed income, convertible bonds, hedge funds, Asian markets and nature assets, divergence can create openings for investors in the following ways:
 

• In sustainable equities, we identify companies operating in areas with more resilient growth metrics and trading at attractive valuations, using a combination of system change analysis and bottom up fundamental stock picking 
• The decarbonisation theme is unlikely to be derailed by the trade war, creating opportunities in climate equities for a diversified investment approach that tracks benchmark performance while providing additional, material exposure to the net-zero transition
• Nature-based real assets typically exhibit resilience against geopolitical headwinds because their core value drivers are linked to inelastic demand and represent a compelling defensive anchor for portfolios 
• The recent selloff in US Treasuries means fixed income investors should favour adaptable and flexible global solutions to capitalise on emerging trends and navigate uncertainty
• In Asian markets, we expect the trade war to hasten Asia’s economic expansion through trends including greater inter-regional trade and advancing technological leadership 
• The paradigm shift away from globalisation means hedge fund strategies could offer more balanced allocations, and a disciplined and flexible approach
• Convertible bonds enable investors to express views in both equities and bonds, and are a solution that derives performance from higher volatility while providing diversification.
   

In the articles below, our portfolio managers discuss where divergence can be tapped to give investors an advantage. Please click on the buttons to read their responses – and to discover their views on what should keep investors up at night in ‘after the bell’.