Quilter’s WealthSelect Managed Portfolio Service (MPS) has used its latest quarterly rebalance to increase its equity allocation to the US following the re-election of Donald Trump.
At the same time, Quilter has reduced European equity allocation within the Managed and Responsible portfolios as it believes Europe is vulnerable in the wake of Trump’s tariffs.
Additionally, it also reduced the UK equity allocation within the same portfolios, mainly due to chancellor Rachel Reeves’ first Budget on the 30 October.
Quilter said the Budget “is expected to create growth challenges and may deter overseas investors from seeking valuation opportunities in UK equity markets”.
Typically, the WealthSelect portfolio managers have maintained their generally cautious stance. However, they anticipate that president-elect Trump’s campaign pledges of corporate tax cuts and deregulation will benefit US-based businesses and provide a near-term boost to the US economy.
The team have added exposure to outside of the Magnificent 7 as they expect sectors such as financials and industrials to be the primary beneficiaries of Trump’s White House win.
The increased allocation has been primarily directed towards Quilter Investors US Equity Income within the Managed portfolios, Quaero Capital Cullen US ESG Value within Responsible, and AllianceBernstein Sustainable Global Equity within Sustainable.
Within the Responsible portfolios, a new holding in PZENA Emerging Market Value was added, providing value exposure within the EM manager mix.
Quilter Investors portfolio manager Helen Bradshaw said: “Donald Trump’s victory has shifted the outlook for markets as we move into the new year. As we draw closer to the start of his second term in office, we have used this latest rebalance to ensure the portfolios are adjusted to weather this change of landscape.
“The impact of Trump’s tariffs will be felt globally. In the US, we will likely see a shorter-term economic sugar rush as his promises of corporate tax cuts and deregulation provide a boost to corporate America, and we have increased our exposure outside of the Magnificent 7 to reflect this.
“Comparatively, Europe is likely to suffer the effects, and when combined with the economic challenges the region is already facing, it looks rather vulnerable. The UK might not feel the tariff pinch quite so keenly, but it faces its own headwinds following an underwhelming Budget and a lack of investor interest. Now felt like the right time to reduce our equity allocation in each of these regions.
“2025 looks set to be another interesting year. We will be keeping a particularly close eye on what policies the Trump administration is able to push through and how this reverberates across markets.”
Still, there is a fear that Trump’s administration is expected to prove inflationary and therefore this increases the risk that the Federal Reserve may need to delay rate cuts.
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