The ARC Market Sentiment Survey, a quarterly poll of 78 investment management CIOs examining the 12-month outlook for the major asset classes and sectors, reveals a cautious tone, with conviction levels declining across all major asset classes – particularly with the US.
The geopolitical and macroeconomic backdrop shaped by the early months of President Trump’s return has led many firms to reassess exposure to US assets. Sentiment was 4% net negative to US assets compared to 36% net positive a year ago. While the net sentiment towards equities overall remained positive at 29% this has also softened from 40 per cent in Q1 last year. Bonds suffered the biggest drop in sentiment; it was down to 29% from 44% net positive a year ago.
Dr James Cooke, deputy CIO at ARC, says:
“This is the biggest negative sentiment quarter-on-quarter US swing we have seen since our Market Sentiment survey began in 2010. 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.”
