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If you've worked with us for any length of time you'll know that it's not our normal practice to comment on short-term events or market movements. However President Trump's new tariffs that will come into effect on 5th/9th April are making news across the world, and have sparked significant reactions across global markets as they opened this morning. These tariffs, ranging from 10% to as high as 54% on imports from various countries, have led to declines in stock markets, particularly in the US, Europe and Japan. While such events can feel unsettling, we want to reassure you that history has shown the importance of remaining calm and staying invested during periods of market volatility.
For an informed view, we asked John Genovese, our Investment Team Manager, for his views. Here are his comments.
"For clients invested in the portfolios we manage, you can take comfort in the fact that we have relatively low levels of exposure to areas of the market that are being most significantly affected by tariff-induced selling pressure. A number of our assets used for diversification are actually up in value on the day as we write this. This measured approach to diversification and asset allocation based on relative value allows us to mitigate risks, such as valuation risk and concentration risk, while remaining focused on long-term growth.
Reacting to short-term market movements by making changes to your investment portfolio can often lead to unfavourable outcomes. The evidence of history consistently demonstrates that staying invested
through market cycles achieves, on average, far better long-term returns than attempting to make guesses about when to buy and sell assets. Furthermore, many of the best market returns occur shortly after the worst days, making it nearly impossible to predict the right time to re-enter the market.
The reality is that no-one can confidently predict market prices in advance. The imposition of tariffs appears to be a negative factor, but it's also the case that if the US becomes less attractive to trading businesses the UK is well-placed to derive significant benefits, and could be a positive as the dust settles.
We have been talking about the attractive valuations of UK stock markets for some time, and this continues to be the case. Despite the economic headwinds there is evidence to show that UK business is in pretty sound shape, and remains an attractive place to invest.
During previous periods of market turbulence, those who remained invested were able to benefit from the subsequent recovery and growth. By contrast, those who attempted to time the market often missed out on key opportunities, resulting in lower overall returns.
The chart below illustrates this and shows how longer-term returns can be severely negatively impacted by being out of the market for even short periods of time. The chart shows the annualised returns when
investing in the FTSE All Share Index over 15 years from 2010 to the beginning of 2025 when remaining invested throughout and then if the best days of market performance were missed by attempting to time the market.
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We are closely monitoring the situation and remain committed to managing your investments with a long-term perspective. Our approach is designed to weather market fluctuations and focus on achieving your financial goals over time."
If you have any questions or concerns, please don't hesitate to get in touch with your financial planner who will be pleased to offer you more personalised guidance.
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