US assets experience largest negative sentiment swing for 15 years

More than a third (37 per cent) of wealth managers reduced exposure to the US in the first quarter of 2025, analysis from Asset Risk Consultants (ARC) has found.

According to ARC’s Market Sentiment Survey, this was the largest negative US sentiment swing in 15 years.

This change was driven by the geopolitical and macroeconomic backdrop, which has been shaped by the early months of President, Donald Trump’s, return, resulting in many firms reassessing their exposure to US assets.

Sentiment was 4 per cent net negative to US assets compared to 36 per cent net positive a year previously.

Although the net sentiment towards equities overall remained positive at 29 per cent, this was down from 40 per cent in the first quarter of 2024.

Bonds felt the largest fall in sentiment, dropping from 44 per cent net positive in Q1 2024 to 29 per cent in the first quarter of this year.

ARC noted that while many firms (55 per cent) made no changes, those that did primarily reduced US equity exposure, especially in large caps and technology stocks.

Some firms increased their exposure to US small and mid-caps, while others used call options on the C&P 500, which ARC said suggested a targeted rather than broad bullish outlook.

Firms reduced their exposure actively hedged USD exposure and equity allocations, reflecting a defensive strategy amid market uncertainty.

“This is the biggest negative sentiment quarter-on-quarter US swing we have seen since our Market Sentiment Survey began in 2010,” commented ARC deputy CIO Dr James Cooke.

“President Trump’s ‘Liberation Day’ tariffs threaten to damage sentiment further. Higher asset price volatility ought to provide opportunities for active managers to demonstrate the value they can provide.

“Those managers not making changes indicate they intend to look through the Trump-induced volatility believing tariff imposition may be temporary.”



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