Quilter’s WealthSelect managed portfolio service (MPS) has increased its allocation to US equities in its latest quarterly rebalance, following the re-election of Donald Trump as President.

The move has shifted Quilter’s managed portfolios to an overweight position relative to the strategic asset allocation.

Quilter noted that while its WealthSelect portfolio managers had maintained their ‘generally cautious’ stance, they had anticipated that Trump’s campaign pledges of corporate tax cuts and deregulation would benefit US-based businesses and provide a near-term boost to the US economy.

The portfolio management team expected that sectors such as financials and industrials would be the primary beneficiaries, and have therefore added exposure outside of the ‘Magnificent Seven’.

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 AB Global Sustainable Opportunities within sustainable.

This increased equity allocation was funded by cash, fixed income and alternatives, depending on the risk level and portfolio range, Quilter noted.

Quilter’s WealthSelect team has also chosen to “marginally” reduce the European equity allocation within its managed and responsible portfolios, as they felt that Europe appeared vulnerable amid Trump’s proposed tariffs, which could “exacerbate existing regional issues”.

The UK equity allocation within the same portfolios were also reduced, as while Quilter’s team believed the UK could be more shielded from trade headwinds than the rest of Europe, the Labour government’s first Budget had “underwhelmed” investors.

Quilter said this was anticipated to create growth challenges and could deter overseas investors from seeking valuation opportunities in UK equity markets.

As part of the rebalance, the WealthSelect portfolio managers reassessed the allocation to government bonds, concluding that while bond yields had backed up since their previous rebalance, the underlying policy mix of the new Trump administration was expected to prove inflationary, which could result in delayed rate cuts.

They therefore adjusted the government bond mix within the portfolios, with a small increase in gilts amid weaker growth expectations in the UK.

PZENA Emerging Market Value was added to the responsible portfolios, while the T. Rowe Price Responsible Asia ex Japan Equity was switched to the Veritas Asian fund in the responsible portfolios.

“Donald Trump’s victory has shifted the outlook for markets as we move into the new year,” said Quilter Investors portfolio manager, Helen Bradshaw.

“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 Seven 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.”

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