Tariffs, a Weak Dollar, and Uncertainty: The First 100 Days of Trump

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Donald Trump has completed the first 100 days of his term as President of the United States, making it a timely moment to assess this highly significant period. Some of the words that best capture what has transpired since January 20, 2025, include: tariffs, uncertainty, volatility, and declines.

According to Aberdeen Investments, a striking statistic to illustrate these months is that this is the only presidential term in which the S&P 500, the Dow Jones, and the FTSE World have all declined during the first 100 days.

Furthermore, U.S. economic growth projections continue to deteriorate. A Bloomberg survey reveals that the average forecaster assigns a 45% probability to a recession in 2025, while Apollo Management has raised the alarm by predicting not only a recession but also a stagflation scenario beginning in June, with mass layoffs expected in the trucking and retail sectors.

“The current financial market landscape presents a dangerous combination of weakening economic conditions, geopolitical tensions, and uncertain monetary policy. In the U.S., the risks of recession and stagflation are increasing, while fiscal expansion, far from easing, is intensifying, fueling concerns about the sustainability of public debt. Technical support from corporate buybacks may provide temporary relief but doesn’t change the underlying slowdown,” notes Felipe Mendoza, Financial Markets Analyst at ATFX LATAM.

100 Days by the Numbers

For Ben Ritchie, Head of Developed Market Equities at Aberdeen, these 100 days of Trump 2.0 have starkly shown that when governments and markets collide, investors often lose out. “While market volatility may offer long-term buying opportunities for patient and contrarian investors, it can also wreak havoc on short-term investor expectations,” he reminds.

In this regard, global asset managers have a clear view: while markets initially expected Trump’s presidency to unleash American businesses’ animal spirits via tax cuts and deregulation, a more sober assessment has now taken hold. “Trump is doing what he said he would on tariffs—and more. While we assume tariffs may decline going forward, there’s considerable uncertainty. Both tariffs and uncertainty represent a stagflation shock to the U.S. economy (slower growth, higher inflation), and equities have had to adjust accordingly,” says Paul Diggle, Chief Economist at Aberdeen Investments.

Mario Aguilar, Senior Portfolio Strategist at Janus Henderson, summarizes the period: “Trump’s first 100 days have been marked by increased volatility across all markets and rising investor doubts regarding the U.S.’s role and the dollar’s status in the global economic system. The volatility has undoubtedly been driven by the executive orders issued by Trump—130 so far this year. By comparison, in his first year, Biden issued 77, and Trump issued 55 during his first term. Beyond the executive orders, we must also consider the impact of Trump’s statements and opinions posted on X about various social and economic topics.”

The Tariff Issue

Trade policy has taken center stage over the past 100 days—and its impact is clear. In the short term, Aguilar notes that these policies have caused significant declines in equity markets and a rise in 10-year Treasury yields. “This increase in rates seems to have prompted Trump to delay the implementation of tariffs by 90 days. Short-term volatility is likely to persist, but the longer term is more worrying. The attack on supposed U.S. allies with high tariffs will likely lead to the creation of new supply chains, new trade alliances, and perhaps a new dominant global trade currency other than the dollar,” he points out.

According to Maya Bhandari, Chief Investment Officer for Multi-Asset EMEA at Neuberger Berman, tariffs are the area where President Trump has most clearly “overdelivered,” though she notes that the latest move—a “pause” until July 9 on the temporary activation of the so-called “Trump option”—has brought some relief. “These are 90 days of surface calm, with intense behind-the-scenes negotiations,” Bhandari explains.

This expert at Neuberger Berman notes that this has already led to visible changes—for example, the effective U.S. tariff rate has risen from 2.5% at the start of the year to nearly 17.5%, reflecting 25% tariffs on steel, aluminum, and automobiles, plus a universal 10% tariff. “In this regard, we’ve gone back to the 1930s–1940s. This, in turn, introduces significant downside risks to growth (we expect a 0.5% to 1% impact on U.S. real growth) and upside risks to inflation (3.5% to 4%). For example, growth could be just one-sixth of what it was in 2024. The adjustment will take time, and not all asset markets have adapted—for instance, with valuations at 20 times projected 2025 earnings, U.S. equities still look expensive by historical standards,” she warns.

Dollar Weakness

For Kevin Thozet, member of the investment committee at Carmignac, one of the most striking features of Trump’s first 100 days is the dollar’s 10% decline over the year. “Despite Scott Bessent’s claims, market action in April looks less like a ‘normal deleveraging’ and more like a silent exodus of real capital, both domestic and foreign, from the U.S. due to cyclical factors (stagflation risk) and structural ones (questioning of the U.S.-centered monetary system),” he explains.

In his view, with Trump’s attacks on the independence of the judiciary and the Federal Reserve nearing a constitutional crisis, the likelihood of this silent capital exodus accelerating into a full-blown dollar flight increases. “The normalization of the dollar could go hand-in-hand with another downward correction in U.S. equity valuations. In fact, such a scenario could trigger the reappearance of the ‘dollar smile’—where the dollar appreciates when macroeconomic conditions deteriorate—although the activation point is now expected to be much lower than historically,” Thozet argues.

From Janus Henderson’s perspective, attacks on the Fed and Jerome Powell are dangerous because currency strength depends partly on the stability and independence of monetary policy and the central bank. “If a central bank loses market credibility and is seen as politically driven rather than data-driven, inflation expectations could become unanchored. That would lead to sharp equity declines and spikes in bond yields. It could also call into question the dollar’s reserve status, potentially dismantling the post-Bretton Woods order, with negative global impacts—especially for the U.S. economy if international investors start liquidating U.S. bond positions,” Aguilar states.

Ripple Effects

Finally, Rebekah McMillian, Associate Portfolio Manager on the Multi-Asset team at Neuberger Berman, notes that aggressive trade policy and new tariff announcements have unleashed greater market volatility and triggered key themes shaping markets in 2025 so far. She highlights two main effects: first, a downward revision in U.S. (and therefore global) growth prospects due to cooling economic activity, contrary to the “soft landing” narrative prevalent earlier in the year. Second, she notes significant shifts in fiscal and economic policy approaches worldwide—especially in Germany and China, which have launched support measures to counter the negative effects of tariffs and bolster their domestic economies.

“As a result, we’ve seen a clear risk-off reaction in markets, significant performance divergence between U.S. and non-U.S. assets, a weaker dollar, and U.S. Treasury bond sell-offs—all sharply contrasting with the post-election ‘American exceptionalism’ narrative,” says McMillian.

According to international asset managers, the Trump 2.0 shock is far from over. “The damage should not be underestimated. U.S. policy-making has been made a laughingstock, and the current uncertainty demands higher risk premiums—especially from foreign investors in U.S. assets. Above all, companies are voicing real concerns about the impact on demand and earnings prospects. The Trump shock isn’t over. The odds remain high that macro, valuation, sentiment, and technical indicators for U.S. assets will continue flashing red,” states Chris Iggo, CIO of AXA IM.

The Investor’s Dilemma

This entire context has left investors with a clear dilemma over the past 100 days: whether to react or stay the course. According to David Ross, CFA, International Equity Manager at La Financière de l’Échiquier (LFDE), Trump’s second term has made fund managers’ jobs significantly harder. “From a long-term perspective, we’re reassessing positions based on returns and the potential impact of tariffs in the coming years. In the short term, given how quickly policies can change, relevant analysis is almost impossible. All we can do is speculate—and speculation isn’t enough to make sound investment decisions,” Ross notes.

In his view, just a few months ago we were in a bull market where investors used dips as buying opportunities, but the rise in risk premiums for U.S. assets has shifted market sentiment. Now, he believes, we’re in a bear market mindset—one summed up as “sell the dip.”

“In recent weeks, the S&P 500 has repeatedly failed to break above the 5,400-point level. We now view this as the new ceiling. And since the biggest rallies often occur in bear markets, my advice to the team is simple: don’t panic and remain highly cautious,” Ross concludes.

Finally, Amadeo Alentorn, Systematic Equity Manager at Jupiter AM, notes that we’ve gone from a 2024 ending in uncertainty—but with optimism—to deeper uncertainty with more pessimism. “This shift is evident in investment styles. Investors have moved away from expensive, fast-growing companies—especially in tech—toward cheaper, undervalued, defensive stocks that didn’t benefit from the tech boom. This shift has been driven by erratic U.S. policy and the cooling of growth expectations and inflation trends,” he explains.

In this context, Alentorn recommends building more diversified portfolios, especially with strategies designed to decouple from overall market behavior. “2025 will be a year of volatility. Even if all tariffs were suddenly reversed, Trump’s impact on business, consumer, and investor confidence is lasting. We’re witnessing a historic regime change. After years of strong equity returns above historical averages, we’re entering a new cycle in which we must rethink how to navigate the next five years,” the Jupiter AM manager emphasizes.

Massive Sell-Offs and Corrections Reach Fixed Income: How Do Tariffs Affect Bonds?

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The trade war continues its course with the entry into force of Trump’s 20% tariffs on the EU and 125% on China, with red coloring the Asian and European stock markets. No one escapes the sharp declines driven by the imposition of tariffs and the uncertainty surrounding the reaction of the affected countries and their negotiating capacity. Fixed income assets are also suffering the impact of tariffs and the overall context of volatility.

“Currently, markets are fearful and operating accordingly. Even after the impact of the tariff announcement last week, we have seen very diverse headlines and even a temporary risk rally triggered by a televised interview with some unfortunate statements. Progress in trade agreements with Japan and South Korea seems promising, but negotiations with China and the European Union will be more decisive for both market volatility and global economic growth,” says Aaron Rock, Head of Nominal Rates at Aberdeen Investments.

According to Marco Giordano, Chief Investment Officer at Wellington Management, fixed income markets rose amid a widespread risk-off movement. “Yields fell in major economies, led by Australia, along with Japan, New Zealand, and China. European yields followed the same path, with markets pricing in a 90% probability that the ECB will cut interest rates at its next meeting on April 17. U.S. Treasury yields fell across the curve, with the front end leading the move. In credit markets, the Credit Default Swap Index (CDX) for U.S. high yield bonds widened by 20 basis points following the announcement, 10 points more than its euro counterpart, indicating greater risk aversion in U.S. markets,” notes Giordano.

In fact, the yields on 10-year U.S. Treasury bonds rose to 4.47% before stabilizing at 4.33%, indicating a massive sell-off in the bond market. “Bond markets have shown notable fluctuations over the last two trading sessions. Government bond yields are experiencing new volatility, and credit spreads are finally showing a real impact from macroeconomic and stock market pressures,” explains Dario Messi, Head of Fixed Income Analysis at Julius Baer.

According to Rock, yield curves may continue to steepen. “Concerns about growth and pressure for central banks to intervene will continue to support short-term bonds. The behavior of the long end is more uncertain: yields could continue to rise due to inflation expectations, forced liquidations, and fears about debt sustainability; however, recession fears could exert downward pressure. Moreover, the weak 3-year bond auction in the U.S. recorded last night has intensified doubts about the safe-haven status of U.S. Treasuries, exacerbated by the loss of credibility in the country’s economic policy. We anticipate continued pressure on U.S. Treasuries,” adds the Head of Nominal Rates at Aberdeen Investments.

The Impact of Tariffs on U.S. and EU Bonds

According to Mauro Valle, Head of Fixed Income at Generali Asset Management (part of Generali Investments), over the last week, U.S. yields moved 30 basis points lower, reaching 3.9%, after Trump announced the global tariff plan and then retraced 20 basis points after the news of a 90-day suspension period.

“Real yields dropped to a low of 1.6% before returning to 2.0%; breakeven rates fell from 2.4% to 2.15%. Trump’s tariff plan impacted risk assets, and now the market is trying to assess the recession risk in the U.S. Market fears of a global recession are high and well-founded, as global trade is likely to decline significantly,” says Valle.

In his opinion, another risk factor to watch is the EU’s retaliation plan in response to U.S. tariffs: whether the EU will take a soft approach or not. “The market expects more Fed cuts, with up to 4 cuts by December, as the Fed will support the economy and employment despite the risk of inflation. But in his last speech, Powell confirmed his focus on the U.S. inflation profile. The ISM data confirmed the U.S. economy’s slowdown, and the labor report showed an improvement in non-farm payrolls but also a 4.2% unemployment rate. U.S. yields could continue to move within a range around the 4.0% level, given the high level of uncertainty and the growing term premium investors will demand for long-term U.S. yields. Considering possible Fed support, if the scenario deteriorates, the U.S. curve steepening could continue,” explains this expert.

In contrast, focusing on the European Union, Valle highlights that bund yields fell to the 2.5% level following the news of the tariffs — the level observed before the announcement of the German fiscal bazooka — and then rebounded to 2.6%. “The Eurozone scenario seems somewhat easier to interpret. Tariffs may have a moderately negative impact on EU growth but will be offset by German fiscal spending towards the end of 2025 and in 2026. Eurozone inflation is expected to continue declining in the coming months. The ECB could cut rates in upcoming meetings, bringing official rates below 2% if necessary, as the economy will be negatively affected by tariffs while inflation will likely be less sensitive to them. The market is close to fully pricing in a cut in April, and three cuts are expected before December,” comments the Head of Fixed Income at Generali AM.

Emerging Corporate Bonds and Tariffs: Beyond the Noise

We must not forget that trade policy and geopolitics have significant direct and indirect repercussions on emerging market companies. Countries like Mexico face direct consequences, though broader effects such as slowing growth, weakening risk sentiment, and emerging market currency turbulence are also evident.

For Siddharth Dahiya, Head of Emerging Market Corporate Debt, and Leo Morawiecki, Associate Investment Specialist in Fixed Income at Aberdeen Investment, credit markets have remained remarkably stable despite the rapid deterioration in risk sentiment over recent weeks. “Although emerging market credit has shown some weakness, spreads have only widened by one basis point so far in March, with a total return of -0.56%. The reaction of emerging market credit has been even milder: total returns of -0.22%, reflecting its resilience in a volatile geopolitical world,” they explain.

In this regard, they point out that local currency assets have held up against expectations of a potentially weaker U.S. dollar amid a faster and deeper rate-cutting cycle. “So far this year, the spot dollar index has weakened by 4.4%, while the Brazilian real, the Mexican peso, and the Polish zloty have posted total returns of over 3%. This should give emerging market central banks room to continue cutting official interest rates,” they note.

According to the analysis of Dahiya and Morawiecki, the greatest impact has occurred in spreads of oil and gas companies. However, they explain that this has been more due to the persistent weakness in oil prices and the intentions of the Organization of the Petroleum Exporting Countries (OPEC) to soon ease production cuts. “Although the repercussions have been limited, the tightening of financial conditions in the U.S. could lead to a rise in yield spreads globally. We are reassured by the strong initial balance sheets of emerging markets and the absence of major fiscal problems in some of the largest countries,” they conclude.

The US Dollar Loses Its Smile as Latin American Currencies Shine

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According to experts, the recent weakening of the US dollar has real consequences for investment portfolios. As investors consider whether or not to make changes in terms of currency exposure, the debate over the dollar’s behavior remains open and vibrant.

In fact, the greenback posted a slight recovery yesterday after President Trump clarified he had no intention of removing Fed Chair Jerome Powell, easing concerns over the central bank’s independence. Additionally, a more conciliatory tone toward China helped revive risk sentiment, boosting demand for US assets and reducing appetite for emerging market currencies.

Lale Akoner, Global Markets Analyst at eToro, notes that in the current context, investors seeking better currency balance might want to diversify their FX exposure. “Holding wealth in a single currency concentrates risk. Some investors are allocating to euro-, yen-, or Swiss franc-denominated assets. Others are using international funds with currency-hedged share classes to broaden their safety net and neutralize FX risk. Alignment is key: US investors anticipating continued dollar weakness tend to avoid hedging to capture foreign gains, while European or UK investors with US assets may prefer hedging to mitigate FX losses,” says Akoner.

She highlights that during Q1 2025, the depreciation of the US dollar had a significant impact on Latin American currencies, driving widespread appreciation across the region. According to analysts, this trend is tied to factors such as uncertainty surrounding US trade policy under Donald Trump’s administration and expectations of interest rate cuts by the Federal Reserve. So what’s happening with these currencies?

The Strength of the Mexican Peso

In this context, the performance of certain Latin American currencies stands out. For instance, earlier this week, the Mexican peso gained ground against the dollar, reaching multi-month highs, as investors responded to the greenback’s weakness.

“The Mexican peso has maintained a positive trend against the US dollar, trading below the 19.50 pesos per dollar zone. This appreciation has been driven by both external and internal factors, which have strengthened investor confidence in the national currency. In an uncertain global environment, the peso’s stability stands out as a sign of economic resilience and relative strength,” explains Antonio Di Giacomo, Financial Markets Analyst for LATAM at XS.

He adds that from a technical standpoint, the USD/MXN exchange rate is at a critical level. “The 19.50 mark acts as a key support, and a potential downward break is being closely watched, which could open the door for further peso appreciation. This technical outlook has become an additional factor fueling short-term positive expectations,” he notes.

However, according to Quasar Elizundia, Market Analysis Strategist at Pepperstone, the Latin currency could face headwinds. “In the US, easing fears of political interference in the Fed and renewed hopes of a trade truce between the US and China could boost the greenback.”

Elizundia points out that domestically, while Banxico’s relatively high benchmark interest rate and favorable interest rate differential continued to attract inflows, mixed data may cloud the peso’s trajectory. “Retail sales fell 1.1% year-over-year in February, a sharp reversal from the 2.7% increase in January. Although monthly growth remained marginally positive, the data confirmed a loss of household consumption momentum. This weakness coincided with the IMF’s downward revision of Mexico’s economic forecast, now expecting GDP to contract by 0.3% in 2025.”

Brazil, Chile, and Argentina: Advancing Against the Dollar

Looking at Brazil and Chile, the trend is similar. The Brazilian real appreciated by 1.01%, trading at 5.7055 per dollar, mainly strengthened by the global retreat of the dollar and expectations of interest rate cuts by the Central Bank of Brazil. Analysts add that a positive outlook for its trade balance also played a role, as rising export prices—especially commodities—have boosted foreign currency inflows. “However, the sustainability of this trend will depend on the country’s ability to address its fiscal challenges and control inflation, as well as on the global economic outlook,” they note.

Meanwhile, the Chilean peso rose 0.86%, trading at 918.80 per dollar, driven by higher copper prices—the country’s main export. As in Brazil, two other factors supported the currency: monetary policy and the dollar’s depreciation. In this regard, it’s notable that the Central Bank of Chile has maintained a restrictive monetary policy to control inflation, which has contributed to peso stability.

Finally, the appreciation of the Argentine peso reflects a different context. Following the liberalization of exchange controls, the peso showed an upward trend, trading around 1,088 pesos per dollar. According to experts, this appreciation was driven by the urgent need for local currency liquidity and by monetary policies implemented by President Javier Milei’s administration.

“The Argentine peso maintained its upward bias at the beginning of the week as the market adjusted following the recent exchange liberalization, showing an urgent need for local currency liquidity that encouraged the unwinding of dollarized positions. Traders agreed that the monetary policy implemented by ultraliberal President Javier Milei’s government is driving a sustained revaluation of the peso, approaching the central bank’s (BCRA) buying rate,” Reuters reported.

Colombian Peso: Going Against the Grain

On the flip side—quite literally—is the Colombian peso, which has weakened against the dollar and rising trade optimism. According to Elizundia from Pepperstone—a brokerage specializing in international financial and crypto markets—this midweek decline stemmed from both internal and external factors. “Locally, oil prices continued to fall amid signs that OPEC+ may further increase production. Falling oil prices directly harm Colombia’s terms of trade and fiscal outlook,” he explains.

Externally, he adds that the latest dollar rebound further weighed on the currency.

Finally, the analyst notes that looking ahead, all eyes are on next week’s interest rate decision. “After holding rates steady in the previous meeting, any rate cut could reduce the peso’s appeal and increase depreciation pressures,” Elizundia concludes.

The Dollar Loses Its Smile

According to Benoit Anne, Senior Managing Director of Strategy & Insights Group at MFS Investment Management, we are facing a new market paradigm in which the defensive characteristics of the US dollar are weakening. He notes that the DXY index has dropped to around 98.40—a level not seen since early 2022.

“The US dollar is much cheaper than it was a few months ago, but that doesn’t mean it’s historically cheap. If we look at the Fed’s broad real trade-weighted dollar index, the current level remains 17% above its 30-year average, indicating significant overvaluation. Overall, the current market environment does not seem favorable for the dollar, at least based on available information. This suggests that non-US assets could be well positioned to deliver better returns going forward,” Anne concludes.

Trump’s Tariffs Could End Up Being an Opportunity for the European ETF Industry

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The total unpredictability and the unprecedented policy shifts of the Trump administration, along with Europe’s seismic response to these, have led to a drastic reversal in investor sentiment and positioning in recent times. Experts at Xtrackers by DWS have identified several significant changes in performance and asset allocation, including that investors are moving away from U.S. equities and the Magnificent Seven toward regions previously “forgotten” and with low exposure such as, for example, Europe and China.

“There is a clear reversal in the European narrative following the elections in Germany and the change in the U.S. approach to the conflict between Russia and Ukraine. From our point of view, this makes the recent rally in Europe more than just a reversal effect. In times of high uncertainty, ETF flows seem to indicate that the market has finally heard the wake-up call for greater diversification beyond U.S. large caps,” they explain.

Chart: Relative performance versus the S&P 500 (last 12 months, total return in dollars)

U.S. equity ETFs are seeing a sharp drop in new inflows, as investors turn to European, global, and emerging market indices.

One of the main conclusions they draw is that the market inflection point could open opportunities to recalibrate portfolios, as these are experiencing a key reversal of the so-called “Trump Trade”, with a sharp drop in U.S. equities so far this year. In contrast, they point out that more attractive valuations of European equities, along with announcements of larger infrastructure and defense investments, have pushed markets upward in Europe. “This movement is supported by structural factors, such as the new uncertainties around AI and the capital expenditure (capex) investment story that comes with it, as well as the renewed fiscal momentum in Europe,” they clarify in their latest analysis.

At the same time, they believe that geopolitical tensions could make recalibrating risk exposure a priority: “For investors, this represents a window to reposition their portfolios, diversify beyond traditional winners and take advantage of evolving macroeconomic and thematic drivers. Several regions and sectors have been identified as structural laggards by investors (including Europe, China, and the world excluding the U.S.). With very low initial sentiment and a new geopolitical environment, these could become candidates for sustained recovery.”

The New Narrative: Europe’s “Whatever It Takes”

On one hand, the experts point out that a possible ceasefire between Russia and Ukraine is improving market sentiment, which contrasts with the urgency of EU members to substantially increase defense spending, with the goal of reducing their dependence on the U.S. “Germany has announced plans to make major investments in infrastructure and defense, financed through a relaxation of the debt brake and a special fund of 500 billion euros. This could increase indebtedness and the public debt ratio, but at the same time boost economic growth. Other EU countries are likely to follow this path,” they note as an example.

From the firm, they expect these measures to accelerate growth, especially starting next year. Xtrackers forecasts estimate that Germany will grow 0.4% in 2025 and 1.6% in 2026. For the Eurozone as a whole, they project growth of 1% in 2025 and 1.5% in 2026. Meanwhile, the ECB has further supported European markets with interest rate cuts, making equities more attractive compared to traditional savings products and, over time, easing the interest burden for companies.

Lastly, private consumption is beginning to recover thanks to a surprisingly strong labor market and declining inflation. Additionally, macroeconomic surprise indicators have turned positive for Europe. “We believe the euro could strengthen in the short and medium term. Moreover, European stocks, especially mid-caps, which have lagged in the recent rally, could benefit from the planned spending increase,” the analysts explained, adding that Europe’s macroeconomic momentum has become a tailwind for equities so far this year, while U.S. indicators have turned downward.

“Positive economic environment, positive risk appetite, positive structural factors (the historically forecasted higher EPS should drive superior profitability over the cycle, the adjusted valuation of Europe’s SME sector compared to large caps is below the historical average), greater domestic market exposure than large-cap companies,” conclude the experts at Xtrackers.

Goldman Sachs Alternatives Launches a Private Equity Strategy That Provides Access to Goldman Sachs’ Leading Franchises

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Goldman Sachs Alternatives has announced the launch of the G-PE fund, which is part of its G-Series range of open-ended private markets funds that benefit from the firm’s 36-year track record as a leader in private investing. It is the latest fund launched under the G-Series brand.

According to the manager, G-PE is a permanent private equity strategy that provides access to Goldman Sachs’ leading private equity franchises. In this regard, the vehicle allows participation in private equity deals across a range of flagship strategies, such as buyout, growth, secondaries, and co-investment. Additionally, they add that the strategies launched under the G-Series brand have been designed to provide qualified investors worldwide with efficient access to a range of investment strategies spanning Private Equity, Infrastructure, Real Estate Credit, and Private Credit.

This launch is in line with the firm’s efforts to expand access to its $500 billion Alternatives platform for professional investors, including qualified individuals, broadening access to the return and diversification benefits of private markets. The manager indicates that the strategies are accessible through Goldman Sachs Private Wealth Management and selected third-party distributors in various markets. “The expansion of the G-Series comes at a time when both individual and institutional investors are seeking new sources of diversification into assets uncorrelated with public markets,” they state.

Following this launch, Kristin Olson, Global Head of Wealth Alternatives at Goldman Sachs, said: “As more companies choose to stay private longer and a greater proportion of economic growth occurs in private markets, investors will need to look beyond public markets. We believe that investments in private markets can help our clients with the right risk profile to build a more diversified portfolio, and we are pleased to leverage product innovation to expand their access and opportunities.”

State Street and Bridgewater Launch an ETF Based on the Strategies of Investment Guru Ray Dalio

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State Street Bridgewater ETF Ray Dalio
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Fans of Ray Dalio, founder of the hedge fund Bridgewater Associates, now have a new way to incorporate the investment guru’s strategies into their portfolios: State Street Global Advisors and Bridgewater Associates have launched the SPDR Bridgewater All Weather ETF (ALLW), a fund that brings the “all weather” strategy approach within reach of retail investors seeking resilience for their portfolios during market turbulence.

The strategy, which was developed by the hedge fund under Dalio’s leadership nearly 30 years ago, aims to provide exposure to different markets and asset classes to create a portfolio resilient to a wide range of market conditions and environments, according to the fund’s prospectus.

The portfolio allocates assets based on the fund’s view of cause-and-effect relationships, specifically how those asset classes react to changes in growth and inflation. State Street will buy and sell the fund’s investments, which may include a range of global asset classes, such as domestic and international equities, nominal and inflation-linked bonds, and commodity exposures.

The launch of the fund comes as markets face a phase of volatility due in part to concerns around tariffs and their effects on the economy and inflation. It also continues to expand State Street’s range of alternatives following the recent approval of the firm’s private credit ETF with Apollo Global Management.

This actively managed ETF has an expense ratio of 0.85% and invests based on a daily model portfolio provided by Bridgewater.

Private Capital and Liquidity? A New Approach you Should Know About

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In recent years, private capital has taken center stage in institutional portfolios due to its risk-adjusted return potential and diversification benefits. However, its defining characteristic—illiquidity—can pose a challenge for both investors and portfolio managers. In this context, securitization emerges as an innovative and effective solution to transform illiquid assets into listed, liquid, and easily accessible securities.

This article of FlexFunds explains in a clear and practical way how securitization works in the context of private capital, what benefits it offers, and how it can be implemented.

Asset securitization is simply the process of transforming any type of financial asset into a tradable security. Through this financial technique, exchange-traded products (ETPs) are created to act as investment vehicles, with the aim of providing the underlying assets with greater liquidity, flexibility, and reach.

Traditionally, this process has been associated with the banking or mortgage sectors. However, an increasing number of private equity fund managers are exploring this approach to bring more flexibility to their portfolios, monetize assets without selling them directly, and attract a broader investor base.

Private equity funds are investment instruments designed to support the growth of non-listed companies. These vehicles are established through financial intermediaries who raise capital from investors and direct it toward various companies or projects with significant growth potential.

These funds typically have long investment horizons (8 to 10 years or more) and are closed-end structures, meaning that investors cannot enter or exit the fund during its lifespan. This can limit access for certain investors who require greater liquidity or face regulatory constraints.

Some of the most common types of private capital investments include:

Through securitization, it’s possible to pool interests in a private equity fund and issue securities that represent rights to the future cash flows of those assets. These securities can be structured in different risk and return tranches, making them adaptable to various investor profiles.

That said, implementing a securitization structure requires expertise in financial structuring, international regulation, and access to distribution platforms. This is where FlexFunds, a company specialized in creating efficient investment vehicles, can play a key role.

FlexFunds offers investment vehicles that enable private capital managers to:

1.- Increase liquidity: Securitization turns illiquid assets into listed products with ISIN codes, tradable through platforms such as Euroclear and Clearstream, and custodial in existing brokerage accounts.

2.- Diversify risk: By distributing the risks associated with the underlying assets among multiple investors, securitization helps reduce exposure for any individual investor—especially relevant in times of market volatility.

3.- Access international capital: Securitization facilitates access to international capital markets, allowing managers to attract investment from a global investor base.

4.- Protect the assets within the structure: Since the issuance is executed through a Special Purpose Vehicle (SPV), the underlying assets are isolated from any credit risk that may affect the manager and, therefore, the investor.

Like any financial tool, securitization comes with challenges that must be managed, including:

  • Accurate valuation of private assets
  • Transparency and disclosure to investors
  • Compliance with regulations across multiple jurisdictions

Securitization applied to private capital is a growing trend. It offers a viable solution to address the sector’s inherent illiquidity, expand the investor universe, and increase capital market distribution.

If you’re looking to expand the distribution of your private equity fund, securitization may be the tool that helps you reach a wider investor base. FlexFunds’ solutions can repackage this type of instrument in less than half the time and cost of any other alternative on the market.

For more information, please contact our experts at contact@flexfunds.com

BlackRock Expands Its Range of Active ETFs With Two Enhanced Fixed Income Funds

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BlackRock active fixed income ETFs
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BlackRock Expands Its Range of Active iShares Enhanced ETFs With the Launch of Two Enhanced Fixed Income Funds: the iShares $ Corp Bond Enhanced Active UCITS ETF and the iShares € Corp Bond Enhanced Active UCITS ETF. Under the UCITS format, these vehicles offer investors access to “low-cost key asset allocation components that have consistent potential to generate alpha at the core of their portfolios.”

The asset manager explains that both strategies leverage the expertise of its systematic investment platform, with over $300 billion and 40 years of experience, to uncover the insights that drive future returns. The investment team’s process combines the power of big data and advanced technologies with human expertise to deliver predictable and repeatable alpha.

In the opinion of Jeffrey Rosenberg, Senior Portfolio Manager of Systematic Fixed Income at BlackRock, the current market environment has led investors to reconsider the role of fixed income in their portfolios to capture the attractive income opportunity we see today. “Our robust investment process allows us to identify and target bonds with attractive spreads to deliver more attractive risk-adjusted returns than investment-grade indices and active managers, while our quality selection approach helps to reduce downside risks,” says Rosenberg.

In this regard, the asset manager highlights that the new funds are designed to offer the most efficient use of the risk budget by taking hundreds of small evidence-based positions, in order to minimize unwanted risks (sector, duration) and achieve high information ratios. This disciplined approach can be used to complement existing core indexed strategies or to diversify investment styles in a volatile market context. Specifically, the enhanced fixed income investment methodology is based on a technology-driven process that analyzes more than 3,000 issuers daily, focusing on high-credit-quality companies trading at attractive valuations, with the goal of achieving superior total and risk-adjusted returns.

“Investors continue to turn to iShares in their search for innovative ETF solutions and can now access an efficient tool in both indexed and active strategies to achieve their financial objectives. Using active ETFs as core components of an active portfolio allows investors to allocate to proven sources of alpha over time to drive their asset allocation,” concludes Jane Sloan, Head of iShares and Global Product Solutions for EMEA at BlackRock.

From Reacting to Headlines to Possible Tariff Negotiations: Caution Reaches Investment Portfolios

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Tariff negotiations impact investment portfolios

The week began in a frenzy. After a day of widespread declines in global stock markets, as well as in commodities and fixed income, and significant movements in major currencies—especially Latin American ones—the Fed called an extraordinary closed-door meeting. In addition, U.S. President Donald Trump threatened China with an additional 50% tax if it did not withdraw its 34% retaliatory tariffs, while the European Union offered Trump 0% tariffs on industrial products.

Volatility, declines, and uncertainty mixed all in one day—but calm has returned. Today, the sun has risen again and the word most often heard is “negotiation.” “Today’s session opens with optimism given the conciliatory tone of U.S. authorities toward the Land of the Rising Sun. In Europe, Monday’s Trade Ministers Summit resulted in a lukewarm response of intentions and proposals to negotiate with the United States. Meanwhile, China, aware that it is the main economic rival, remains firm in its stance to increase tariffs on U.S. products by 34% starting April 10, despite U.S. threats,” explain analysts at Banca March in their daily report.

According to experts, all attention is now focused on the countries’ ability to negotiate to limit the impact of tariffs. “Negotiations on trade agreements could be complicated and include retaliation and additional tariffs, but will ultimately culminate in agreements with lower trade barriers than those announced last week,” says David Kohl, Chief Economist at Julius Baer. In the opinion of Aline Goupil-Raguénès, strategist at Ostrum AM (Natixis IM), “it is unlikely that these tariffs will be reduced quickly, as Donald Trump seems determined to keep them high long enough to encourage foreign investors to invest in the United States.”

Trump, Tariffs, and the Fed

Andy Chorlton, CIO of Fixed Income at M&G Investments, reminds us that the major unknown of the tariff policy is its impact on inflation, which directly affects the Fed. According to Chorlton, the best example is in the Fed Chair’s comments at the beginning of April, when he stated that he considered the inflation impact of any tariff increase to be transitory—a temporary spike in prices. “Just a few days later, on Friday, he acknowledged that the impact of tariffs on both inflation and employment is uncertain and that he is taking a wait-and-see approach. With so much uncertainty about the final outlook for tariffs, the Fed’s determination to fight any rise in inflation expectations is clear. It’s worth remembering that its commonly known ‘dual mandate’ refers to employment and inflation, not to market stability or stock market rises. Nonetheless, investors clearly feel that the risk to growth is such that this mandate could be tested, and the market now expects five rate cuts by the Fed in 2025,” adds the expert from M&G.

What to Do With Portfolios

The latest weekly market commentary from the BlackRock Investment Institute notes that risk assets will face greater pressure in the short term given the significant escalation of global trade tensions. Therefore, the asset manager has shortened its tactical horizon and reduced risk-taking. “The sharp increase in global trade tensions and the extreme uncertainty surrounding trade policy have triggered widespread sell-offs of risk assets. It is unclear whether the uncertainty will cloud the outlook temporarily or for longer, so we chose to reduce our tactical horizon to three months. This means giving more weight to our initial view that risk assets could come under greater pressure in the short term. For now, we are reducing equity exposure and allocating more to short-term U.S. Treasury debt, which could benefit from investors’ desire to seek shelter amid volatility,” BlackRock notes.

According to Michael Walsh, Solutions Strategist at T. Rowe Price, from a multi-asset perspective, making significant asset allocation changes during periods of intense market turbulence leaves the portfolio exposed to missing improvements in investor sentiment. “The market may respond positively to any news related to resolving the current trade uncertainty. While we remain cautious and have moved away from U.S. equities in particular in recent weeks, we have maintained risk levels close to benchmarks within our multi-asset portfolios. As markets attempt to reassess this heightened level of uncertainty, we seek potential opportunities amid the dislocation,” says Walsh.

He explains that they remain cautious, as the rise in political uncertainty affects global growth, which has so far been solid, and reverses inflation trends. “As always, holding cash during times of turbulence provides liquidity to take advantage of market opportunities amid volatility. Cash interest rates are declining but remain attractive, and we have increased our holdings since the beginning of the year, mainly at the expense of another major defensive asset, high-quality government bonds. Tariffs and other trade barriers could push prices higher, which would drive up yields on fixed income instruments as we move closer to 2025. Where we hold government debt, our bias has leaned toward inflation-linked securities,” adds the strategist at T. Rowe Price.

In fixed income, Banca March reaffirms its view: “Last week we felt it was important to shed any overexposure to longer-duration bonds in the United States after our target of a 4% yield on the 10-year U.S. Treasury was reached.” Meanwhile, the fixed income teams at M&G have been concerned for months that credit spreads had priced in too much optimism, leaving little room for negative surprises, with spreads around the most expensive levels seen since the global financial crisis.

“This optimistic view also spread to government debt markets, where almost no possibility of a slowdown was priced in, and as a result, we considered they offered attractive valuations. In short, the market was fairly complacent, so the starting point of this correction certainly contributed to the size of the moves seen in just a few days. Our value-based fixed income investment approach allowed us to position our strategies defensively heading into Liberation Day, putting us in a good position to face these volatile times,” argues Chorlton.

Vanguard argues that fixed income ETFs can be a good cushion for portfolios in these times of uncertainty. “In this environment, marked by episodes of volatility and the prospect of market downturns, broad diversified exposure to fixed income is one of the most effective tools for investors to insulate their portfolios and mitigate losses. Global bonds with currency hedging, in particular, can be a good example,” argues Joao Saraiva, Senior Investment Analyst at Vanguard Europe.

A Calm Look at What Happened

Monday’s session was marked by very high volatility in both equities and fixed income, with the VIX—the S&P 500’s implied volatility indicator—at levels not seen since COVID-19. “In this environment, markets moved based on headlines. A rumor about a potential 90-day delay in implementing tariffs caused an intraday rally of 7% in the S&P 500, worth $2.5 trillion, which evaporated in just over 15 minutes after the rumor was officially denied. Beyond the volatility, open talks with Japan helped curb the sudden setbacks that marked the start of the session, even allowing the Nasdaq to close in positive territory,” summarize analysts at Banca March.

A key point was the Fed’s emergency meeting, which put on the table the option of intervention. “In this regard, short-term rate futures indicate that the U.S. central bank will cut official rates four times this year. In our view, this reaction seems unlikely, as the Fed will not be able to take such an active role in the face of inflation that could exceed 4%, due to the tariff effect,” add the experts at the Spanish firm.

According to the MFS Market Insights team, global markets had not experienced a level of stress and volatility like this since the early days of the pandemic in 2020. “Government bond yields have dropped significantly, reflecting strong demand for safe-haven assets. U.S. 10-year Treasury yields are now around 4%, after falling about 20 basis points since April 2. Similarly, 10-year German bund yields have fallen by the same margin. Meanwhile, credit markets have begun to show signs of stress, particularly in high-yield spreads, which have widened about 85 basis points in the U.S. and 60 in Europe since last Wednesday. In currency markets, the Japanese yen and the Swiss franc have performed better in recent days, thanks to their defensive nature. Finally, in commodities, oil prices have suffered a significant correction, falling to low $60 levels due to their vulnerability to a global risk aversion shock,” summarize analysts at MFS IM.

Another striking aspect in recent days is that, as noted by Bloomberg, more and more billionaires are breaking ranks with President Donald Trump—or at least with his tariff policy. “Ken Griffin, better known outside the financial world as the man who paid $45 million for a dinosaur, stated that the latest tariffs are a ‘huge policy mistake’ and amount to a heavy tax on American families. And Larry Fink, CEO of BlackRock, was equally direct, saying that most business leaders assure him that the U.S. is already in a recession,” they mention as key examples.

Stablecoins or a Risky Business: The SEC Is Concerned About How Investors Access Them

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SEC concerns about stablecoins
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The SEC’s Division of Corporation Finance is publishing a series of releases dedicated to jurisdictional exemptions for the crypto space. Although the Trump Administration seems more willing to support this growing universe, the literature published by the SEC maintains that certain so-called “stablecoins” are not securities. For Caroline A. Crenshaw, Commissioner of the U.S. regulator, the most striking part of this statement is not so much its final conclusion, but the analysis the staff relies on to reach it. “The legal and factual errors in the statement present a distorted view of the market for U.S. dollar-pegged stablecoins, drastically underestimating their risks,” she says.

As she explains, much of the staff’s analysis is based on the actions of issuers who supposedly stabilize the price, guarantee redemption capability, and generally reduce risk. SEC experts acknowledge, albeit briefly, that some dollar stablecoins are only available to retail buyers through an intermediary and not directly from the issuer. In reality, they acknowledge that it is common—not the exception—for these coins to be available to the retail public only through intermediaries who sell them on the secondary market, such as cryptocurrency trading platforms.

Specifically, more than 90% of stablecoins in circulation are distributed in this way. “Holders of these coins can only redeem them through the intermediary. If the intermediary cannot or will not redeem the stablecoin, the holder has no contractual recourse against the issuer. The role of intermediaries—particularly unregistered trading platforms—as primary distributors of dollar-backed stablecoins poses a series of additional significant risks that the staff does not consider,” says Crenshaw.

Consequences for the Investor

In the Commissioner’s opinion, people are not thoroughly analyzing the consequences of this market structure or how it affects risk, and she argues that the fact that intermediaries handle most of the distribution and redemption of retail dollar stablecoins significantly diminishes the value of the issuer actions on which the staff relies as “risk-reducing features.”

“One of these key features is the issuer’s reserve of assets, which the staff describes as designed to fully meet its redemption obligations—that is, to have enough assets to pay $1 for every coin in circulation. But, as mentioned, issuers generally have no redemption obligations to retail coin holders. These holders have no interest in or right to access the issuer’s reserve. If they redeem coins through an intermediary, the payment comes from the intermediary, not from the issuer’s reserve. The intermediary is not obligated to redeem a coin for $1 and will pay the holder the market price. Therefore, retail holders do not have, as the staff claims, a right to dollar-for-dollar redemption,” she argues.

On the other hand, she considers it inaccurate for the staff to suggest that just because an issuer’s reserve is valued at some point above the face value of its coins in circulation, the issuer has sufficient reserves to meet unlimited redemption requests (whether from intermediaries or holders) in the future.

“The staff also exaggerates the value of the issuer’s reserves as collateral by claiming that some issuers publish reports, called proof-of-reserves, showing that a stablecoin is backed by sufficient reserves. As the SEC and PCAOB have warned, proof-of-reserves reports do not prove such a thing,” she adds.

The SEC’s Conclusion

For the Commissioner, these legal and factual errors in the staff’s statement severely harm holders of dollar stablecoins and, given the central role of these coins in crypto markets, also harm crypto investors in general. Moreover, she highlights that they feed into a dangerous industry narrative about the supposed stability and safety of these products.

“This is especially evident with the staff’s choice to repeat a highly misleading marketing term: digital dollar, to describe U.S. dollar stablecoins. Make no mistake: there is nothing equivalent between the U.S. dollar and privately issued, unregulated, opaque (even clearly opaque to the staff itself), uncollateralized, uninsured cryptoassets loaded with risk at every stage of their multi-level distribution chain. They are a risky business,” she argues.

What Is Happening in Other Parts of the World?

Interestingly, in Latin America, interest in stablecoins has grown over recent years as a tool against inflation—as seen in countries like Argentina and Venezuela—as well as an alternative for facilitating international transactions (Mexico being a prime example) and promoting financial inclusion.

In terms of regulation, the situation varies widely by region. However, Brazil stands out, where a significant increase in stablecoin use has been observed, accounting for around 90% of cryptoasset transactions in the country. According to experts, this growth has led authorities to consider specific regulations to address challenges related to oversight and enforcement.

Across the Atlantic, the European Central Bank (ECB) continues its efforts to ensure that the digital euro meets the Eurosystem’s objectives and aligns with legislative developments within the European Union. In this regard, two major steps were taken last year. First, the ECB published its first progress report on the preparation phase of the digital euro. It highlighted the design of high privacy standards so that digital payments, both online and offline, closely resemble cash transactions. In addition, work began on a methodology to calibrate holding limits for the digital euro.

Second, in December 2024, the ECB published its second progress report, covering progress made between May and October 2024. During this period, the Regulation Development Group completed a review of the initial draft regulation, addressing approximately 2,500 comments. Furthermore, seven new working groups were launched focusing on critical areas such as minimum user experience standards, risk management, and implementation specifications.