Higher U.S. import tariffs aim to boost domestic production, promising economic growth and lower consumer prices. Yet, emerging trends suggest the opposite: tariffs may drive up costs for consumers, stall growth in the coming months, and, in the worst case, spark a trade war that could tip the economy into recession. While a global downturn isn’t imminent, we’re adjusting our asset allocation to navigate the rising uncertainty ahead.

Note: For the main Strategic Asset Allocation report - Q1 2025 , scroll down to the 'Previous Reports' section. SAA Specials like this are published in the months between. 

Driven by historically high returns, low volatility, and limited correlation with public assets, Private Equity and Private Debt have become increasingly popular in long-term investment portfolios. However, there are several developments indicating that the outlook for PE will take a turn for the worse.

The sharp increase in geopolitical uncertainties, a stagnating European economy, and slowing US economic growth could be seen as a brewing storm threatening highly valued US stock prices. However, we believe slowing growth will lead to increased expectations of monetary stimulus, putting upward pressure on asset prices before a potential storm arrives later this year. As a result, we are adjusting several tactical asset allocations this month.