Donald Trump’s Liberation Day has markets on a knife-edge. Investors today must contend with what we like to call Tilt, or Trump-induced liquidity turbulence – a world in which one tweet, one tariff, or one interest rate surprise can send markets reeling.
With inflation still lurking in the background and interest rates and geopolitical uncertainty keeping everyone on their toes, we think investors need to engage with their portfolios a little more to make sure they are not caught out.
In this complex macroeconomic backdrop, long-term, thematic investing, combined with safe haven assets, can allow investors to capture the upside without suffering too much of the downside.
Thematic investing essentially means aligning capital with long-term structural shifts and ignoring the short-term macro noise – it also means going against the grain until the herd (eventually) catches up.
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From British small caps and global infrastructure to sustainability and hard assets, we think it is time to get ahead of the trends shaping tomorrow’s markets.
The first port of call in our Tilt investment strategy brings us to Europe. Despite the usual chorus of US-centric pessimists decrying the lack of verve in the European economy, innovation is booming and a number of funds are harnessing this trend.
Liontrust European Dynamic fund, for example, zeroes in on resilient, high-growth businesses, proving that the “old Continent” still has plenty to offer beyond political wrangling.
Back Britain for small-cap gems
For all the doom-mongering about the UK economy, there could be real opportunity for re-rating, if you know where to look.
Although global fund flows have receded from Britain’s shores, this country’s small and mid-cap sector is a hotbed of underappreciated potential, and funds like VT Downing Unique Opportunities and Schroder British Opportunities are dedicated to unearthing these hidden gems.
With strong balance sheets and serious growth prospects, these companies are well-placed to thrive over a longer horizon.
While European businesses deserve attention, global diversification remains crucial. Morgan Stanley Global Brands provides exposure to world-class companies with serious pricing power – the kind of companies that weather storms and keep customers coming back, recession or not.
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Elsewhere, infrastructure is a sector that never goes out of fashion and remains one of the great multi-decade themes. The First Sentier Global Listed Infrastructure fund taps into essential services like transport, utilities and energy – sectors that will keep growing no matter who’s in power.
Sustainable investing is no longer just a nice-to-have, it’s where long-term capital is being deployed. Indeed, in the long run, it is smarter investing, not just virtue signalling. For example, the Regnan Sustainable Water and Waste fund focuses on companies tackling the global water crisis and waste management challenges, sectors that are only set to grow as populations rise and regulations tighten.
With Trump the ringmaster of daily volatility, investors will need some ballast in their portfolios, and bonds can do just that. For example, Invesco Bond Income Plus delivers steady income streams while insulating against wild market swings.
Tangible assets should provide a complementary hedge, particularly given central banks’ penchant for flip-flopping on rates, and inflation refusing to stay buried. Jupiter Gold & Silver offers exposure to precious metals and mining equities, ensuring a portfolio isn’t entirely at the mercy of central bank indecision.
Fortune favours the well-informed
This isn’t the time to sit on the sidelines. Thematic investing isn’t about chasing fads or timing the market – it’s about positioning capital in the right sectors before everyone else catches on.
In a world where Trump-induced liquidity turbulence can turn markets upside down overnight, the winners will be those who look past the noise and focus on the bigger picture. And don’t forget to add protection.
