Tariffs are the biggest macroeconomic concern for two in three investors, poll finds

A Schroders survey of nearly 1,000 institutional investors and wealth managers, representing $67 trillion in assets, reveals that 63% identify trade tensions and tariffs as the most significant macroeconomic concern impacting investment strategy, dwarfing other risks by a factor of six. This trade uncertainty is driving demand for stability, with approximately 80% of investment professionals indicating they are likely to increase allocations to actively managed investments to mitigate volatility. Schroders' CIO, Johanna Kyrklund, suggests active strategies are favored for managing complexity and creating portfolio resilience amid structurally higher interest rates and high debt levels.

Analysis

A Schroders survey conducted between April and May, polling nearly 1,000 institutional investors and wealth managers representing a combined $67 trillion in assets, reveals that trade tensions and tariffs are the foremost macroeconomic concern. Specifically, 63% of respondents identified trade levies as the most significant risk impacting their investment strategy, a concern rated more than six times greater than the next highest-ranking issue. This pronounced uncertainty surrounding trade is consequently driving a demand for stability, evidenced by approximately four out of five investment professionals indicating a likelihood of increasing their allocation to actively managed investments in the upcoming year. Schroders' Group Chief Investment Officer, Johanna Kyrklund, highlighted that resilience is now paramount as financial markets adjust to structurally higher interest rates and high levels of debt, conditions which challenge passive investment approaches. In this environment, active strategies are perceived as offering the necessary control to manage complexity, enhance portfolio resilience, and capitalize on emergent opportunities, particularly as the survey was conducted prior to the announcement of a potential U.S.-China trade agreement, the finality of which remains pending presidential approvals.

Key Decisions for Investors

• Investors should evaluate increasing allocations to actively managed funds to navigate the heightened market volatility stemming from trade uncertainties and to potentially capture alpha in a market where broad-based gains are less certain.
• Careful monitoring of ongoing trade negotiations and tariff policies is critical, as these factors are currently the dominant driver of investor sentiment and strategic asset allocation shifts.
• Portfolio construction should emphasize resilience, potentially through strategies that can adapt to changing macroeconomic conditions, given the backdrop of persistent trade concerns, rising interest rates, and significant debt levels.