Chart of the Week: Search For The Hero

Last Thursday  was World Book Day,  a highlight for parents, as children across the country donned the costumes  of their favourite characters. From Harry Potter to Elsa from Frozen, and  from superheroes to villains, playgrounds were filled with colourful figures.

The real  world, too, is full of characters, and one in particular took centre stage  for investors last week: Donald  Trump.

Markets  dislike uncertainty,  and right now, uncertainty is in abundance. The way the Trump administration  is handling tariffs is unsettling investors, with the rules of engagement  seeming to change every day.

On Monday,  Trump had announced 25% tariffs on Mexico and Canada, taking effect the next  day. By Wednesday, he’d declared that carmakers would be temporarily spared  from these levies. Then on Thursday, he broadened the list of goods exempt  from tariffs. This ever-changing stance has left investors questioning what  comes next.

Interestingly,  US markets sold off following the news of tariffs being rolled back. On the  surface, that might seem like bad news. But in reality, it sends a clear  message: markets want clarity. Investors are telling the Trump administration  to be more consistent in their approach to policy.

As the chart  below shows, the stakes are high, and not just for Canada and Mexico. US  states like Michigan, Texas and New Mexico rely on trade with Canada and  Mexico for a substantial slice of their GDP.

Hero or  villain?

The markets  are casting Trump as a villain. His decision to roll back some tariffs  suggests he wants to be seen as a hero.

But in  markets, as in storytelling, you’re  either the villain or the hero – you can’t be both.

Market  performance: a global perspective

While US  markets have been shaken by these policy swings, other regions have been  performing well. Year to date, markets in the UK, Europe and Asia have shown  stronger returns, benefiting from a more stable policy environment. This  divergence reinforces the importance of looking beyond just one market and  embracing a global, diversified investment approach.

Key takeaway:  the power of a diversified portfolio

Just as every  great story needs a mix of characters – heroes, villains and sidekicks – your  portfolio benefits from diversification. A multi-asset approach spreads risk  by investing across different asset classes, aiming to ensure that no single  event or policy shift has an outsized impact on performance. Holding a  variety of investments can help you navigate uncertainty and increase  resilience in volatile times.

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This article is provided for general information purposes only and should not be construed as personal financial advice to invest in any fund or product. These are the investment manager’s views at the time of writing and should not be construed as investment advice. The opinions expressed are correct at time of writing and may be subject to change. Capital is at risk. The value and income from investments can go down as well as up and are not guaranteed. An investor may get back significantly less than they invest. Past performance is not a reliable indicator of current or future performance and should not be the sole factor considered when selecting funds.