Asset Allocation Committee Outlook Q2 2025: The Storm Before The Calm?

2025-04-15 04:52:00 ET

Summary

• The April 2 U.S. tariff announcements were close to a worst-case scenario and introduced new growth and inflation risks.
• Recent U.S. small- and mid-cap underperformance may have provided a more attractive entry point in advance of these catalysts.
• The disruption has prompted what we believe will be sustained pro-growth policy action in Europe, leading us to upgrade our view on this market.

The Storm Before the Calm?

The first weeks of the new U.S. Administration have been more disruptive than the Asset Allocation Committee anticipated, particularly in the area of tariffs. We believe that trade negotiations are possible and a return to more predictable policymaking can revive animal spirits, but the risks have undeniably risen. The disruptions have already prompted strength-building and pro-growth policy action in Europe, leading us to upgrade our view on this market while maintaining a balanced view on overall asset allocation.

Market Views

Based on 12-Month Outlook for Each Asset Class

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