One third of wealth managers cut back on exposure to US equities in the first quarter of 2025, research from ARC has found.
The ARC Market Sentiment Survey, a quarterly poll of 78 investment management CIOs examining the 12-month outlook for the major asset classes and sectors, revealed a cautious tone. Conviction levels declined across all major asset classes.
Net sentiment towards equities overall remained positive at 29%, but this has dropped significantly from 40% in the first quarter last year.
Bonds suffered the biggest drop in sentiment, with the asset class falling to 29% from 44% net positive a year ago.
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ARC said the geopolitical and macroeconomic backdrop to President Donald Trump’s return has led many firms to reassess exposure to US assets.
Sentiment was 4% net negative to US assets compared to 36% net positive a year ago.
While many investment firms made no changes, those that did primarily reduced US equity exposure, particularly in large caps and technology stocks.
Some increased exposure to US small and mid-caps, while some used call options on the S&P 500, suggesting a targeted rather than broad bullish outlook, ARC said.
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Dr James Cooke, deputy CIO at ARC, said: “This is the biggest negative sentiment quarter-on-quarter US swing we have seen since our market sentiment survey began in 2010. President Trump’s ‘Liberation Day’ tariffs threaten to damage sentiment further.
“Higher asset price volatility ought to provide opportunities for active managers to demonstrate the value they can provide. Those managers not making changes indicate they intend to look through the Trump-induced volatility believing tariff imposition may be temporary.”
