Advisers searching for ‘pockets of opportunities’ as tariff saga continues

According to Fidante’s latest Adviser Markets Survey, following US President Donald Trump’s April announcement, around four in 10 Australian advisers said they were not bearish on both US (44 per cent) and Australian (39 per cent) equities.

While markets bounced back relatively quickly once the 90-day pause on the sweeping tariffs was announced less than a week after the so-called “Liberation Day”, in the initial fallout, advisers were split on how the markets would react.

Namely, some 31 per cent expected that the Australian and US share market would “bounce back” within six months; however, 29 per cent believed markets would continue to fall further and 26 per cent expected it would stay about the same.

The survey revealed that the April event even managed to overtake some of advisers’ long-term concerns with half (50 per cent) of advisers ranking Trump’s economic policies and tariffs as their top concern in April, while back in November, high equity valuations and inflations were ranked as the number one issue.

Looking at how this has impacted investor behaviour, Fidante reported that in the past 12 months, the US equity market had held favour as it continued to deliver outsized returns, largely as a result of the strong performance of the “Magnificent Seven” tech stocks.

In the wake of Trump’s tariffs, Fidante found that advisers have now started looking to alternative sources of alpha to drive returns in 2025.

Over the next six months in particular, around a third (32 per cent) of advisers said they plan to increase allocations to global equity small caps, while others are looking to increase their exposure to emerging markets equities (31 per cent) and Australian equity small caps (30 per cent).

Alternative assets are also being considered, with some advisers looking to increase allocations to infrastructure (29 per cent), private equity (22 per cent) and private credit (21 per cent).

Although Trump’s announcement certainly rocked the markets, Fidante Affiliates general manager Evan Reedman suggested that advisers’ steady response highlights the importance of discipline during market upsets.

“The markets reacted strongly to the US tariff announcements, triggering sharp swings in investor sentiment both globally and locally,” Reedman said.

“This was an unexpected jolt, but advisers largely stayed the course, with the majority expecting client allocations to Australian and US equities to remain steady as they assessed how volatility would play out.

“Markets have since rebounded and this instinct to remain disciplined has proven correct. It reinforces the value of financial advice in helping investors navigate market uncertainty and to ensure their portfolios are protected across market cycles.”

And while the market has recovered since, with Trump still openly planning to charge ahead with significant tariffs, despite ongoing backlash, both within the US and locally, Reedman said that challenges are likely to continue and advisers will look for alternatives as they attempt to avoid the worst of the events to come.

“It is likely global macroeconomic and geopolitical tensions will continue and for investors, that means navigating a period of ongoing uncertainty and volatility,” he said.

“Advisers have been quick to look further afield for pockets of opportunities – such as emerging markets, small caps and private markets – that can provide both diversification and alpha to a client’s portfolio.”