Inside the markets | Multi-Asset review

March was another eventful month for markets, characterised by unconventional conditions and significant events. The new US administration's confrontational and unconventional rhetoric since taking power in January has been a major driver of market dynamics.

Key events and developments

The new administration introduced numerous executive orders, including measures to protect domestic energy security and establish the Department for Government Efficiency. Notably, the Department of Education was dismantled. Diplomatic and trade developments, such as talks of the US taking control of Greenland and Canada, renaming the Gulf of Mexico, and the controversial meeting with President Zelensky, created market uncertainty. Additionally, broad-based tariffs were imposed on numerous trading partners, including the European Union, India, and Japan, leading to retaliatory measures from countries like China.

Market reactions and performance

Global equity markets saw significant declines since mid-February, accelerating in early April due to tariff announcements. Government bonds have been a relative safe haven, though long-duration US bonds showed rising yields, indicating waning confidence. US equities, Japanese equities, and oil were the key laggards this year, reflecting the impact of tariffs and global economic concerns.

Strategic positioning and advice

Diversification and positioning for a different market environment are crucial. This includes reducing concentration in US equities, diversifying government bond exposure, and preparing for higher trend inflation and deglobalisation. Investors are encouraged to maintain a long-term view and avoid making hasty decisions during market stress. A robust investment process and discipline are essential, along with the value of financial advisers in helping clients navigate market volatility and make informed decisions.

Resources and future outlook

A wealth of resources is available on Basecamp to assist advisers and clients in understanding market dynamics and making strategic decisions. While volatility is expected to persist, it presents opportunities for active managers to capitalise on market dislocations.

Given recent market volatility we've updated our client aids, which you might find particularly useful, helping to articulate key investing concepts such as 'time in the market' and why it's important to take a long-term view.