From Donald Trump’s first term (2017–2021), we know that he favors low interest rates and a not overly strong dollar—two ideas that now appear to clash with the work Jerome Powell has done at the helm of the Federal Reserve since February 2018. His current term as Chair of the central bank ends in May 2026, though he will remain a Governor until February 2028. Without a doubt, the controversy between Trump and Powell is heating up, particularly after Powell’s recent speech on April 16 at the Economic Club of Chicago, where he addressed U.S. economic prospects.
In his address, Powell emphasized that the U.S. economy remains in a solid position, though he acknowledged that it faces downside risks due to uncertainty generated by trade policies, especially the new tariffs imposed by the Trump administration.
“At the moment, we are in a good position to wait for greater clarity before considering any adjustment in our monetary policy stance. We continue to analyze incoming data, the evolution of the economic outlook, and the balance of risks. We understand that high levels of unemployment or inflation can be harmful and painful for communities, families, and businesses. We will continue doing everything in our power to achieve our goals of maximum employment and price stability,” concluded Powell.
Beyond this tempered conclusion, Powell delivered key messages about the relationship between monetary policy and the Trump administration’s tariff strategy:
“As we better understand changes in policy, we will gain a clearer view of their implications for the economy and therefore for monetary policy. It is very likely that tariffs will generate at least a temporary increase in inflation. The inflationary effects could also be more persistent. Avoiding that outcome will depend on the magnitude of those effects, how long they take to fully pass through to prices, and ultimately on keeping long-term inflation expectations well anchored.”
Juan José del Valle, analyst at Activotrade, remarked:
“Powell’s Wednesday speech raised doubts about the economic outlook, and Trump’s harsh tone toward the Fed Chair—calling into question the institution’s independence—led the Nasdaq to fall more than 3% during the session.”
Trump’s Response
President Donald Trump responded the following day, expressing his displeasure with Powell for not lowering interest rates and even suggesting his removal. According to international news agencies, the White House is reportedly evaluating the dismissal of the Fed Chair. Bloomberg reported that Kevin Hassett, economic advisor to the White House, said: “The president and his team continue to study the matter.”
This isn’t Trump’s first criticism of the Fed. Earlier this month, he criticized the central bank’s “slowness” in lowering rates via a post on Truth Social, and recently labeled the Fed’s reports a “complete disaster,” accusing Powell of “playing politics” by not adjusting interest rates—especially compared to the ECB, which has implemented multiple cuts.
The Stakes for the Fed
Experts warn that this political pressure from the White House adds to the already challenging situation the Fed faces: balancing inflation and growth risks.
“The bank appears focused on preventing the unanchoring of inflation expectations. The latest New York Fed survey highlighted this risk, showing that Americans’ short-term inflation expectations have risen significantly, while economic outlooks have sharply deteriorated.”
However, U.S. retail sales offered a more reassuring signal—though the figures were driven in part by early household purchases ahead of tariff implementation. The true impact of the trade war may take time to reflect in economic data. Still, uncertainty is already weighing on businesses: visibility has plummeted, and order books are thinning, as shown by ASML’s figures.
Some firms are directly on the front lines of the trade war: Nvidia is expected to take a $5.5 billion asset loss due to the ban on exporting its H20 chips to China, according to Edmond de Rothschild AM’s daily analysis.
Can the President of the Fed Be Dismissed?
According to the Federal Reserve’s own rules, the Chair cannot be dismissed for political reasons or policy disagreements. Under the Federal Reserve Act, Board members can only be removed “for cause”. However, the law does not explicitly define what that entails. Legal experts interpret “cause” to mean misconduct, inability to perform duties, corruption, extreme negligence, or legal violations.
“While legal scholars argue that a president cannot easily remove the Fed Chair, and Powell has stated he would not resign if asked by Trump, the latest comments from the White House are forcing investors to seriously consider the implications of a possible dismissal,” Bloomberg notes.
Historically, no Fed Chair has ever been removed. According to legal experts, any attempt to dismiss Powell for political reasons could trigger legal challenges, provoke a crisis of confidence, and prompt a negative market reaction as the institution’s independence is undermined.
At a time when financial markets are experiencing increasing volatility, household interest in stock markets remains a key indicator of economic confidence. Which countries invest the most? According to the latest study* by HelloSafe, the citizens of the United States, Canada, and Australia are the most active. After analyzing cultural, economic, and regulatory dynamics, the authors conclude that there are significant differences from one continent to another.
To understand the results of this report, it is necessary to take into account that the data presented on this map are the most recent available, and correspond to 2023 and 2024. “As there are no official statistics on the matter, there is a margin of error between 5% and 10% due to fluctuations in stock asset ownership and the difficulty of estimating the number of such owners. The figures include investors who directly own a stock portfolio, but also people who invest indirectly in stock assets through various financial vehicles (such as life insurance, for example),” clarify the authors of the report before we delve into its conclusions.
The analysis of stock ownership rates reveals marked disparities between continents since in North America, households have the highest rates, with 55% in the United States and 49% in Canada, reflecting a strong investment culture. Oceania follows this trend, with 37% in Australia and 31% in New Zealand. In Europe, there are significant differences as Nordic countries like Sweden (22%) and Finland (18.7%) are ahead of large economies like France (15.1%) and Germany (14.2%).
In Asia, rates remain globally modest, despite the dynamism of financial centers such as Hong Kong (13.8%) and Japan (15.2%). Lastly, emerging countries in Latin America and Africa, such as Brazil (8%) and Morocco (0.5%), present much lower levels, illustrating still-developing financial markets.
Pauline Laurore, finance expert at HelloSafe, explained: “The difference in stock market participation between countries can be explained by a combination of structural factors. In countries like the United States and Canada, investment in equities is deeply integrated into retirement savings plans —through pension funds— and supported by strong tax incentives. The financial culture there is more developed, and access to markets is facilitated by low-cost platforms and favorable regulation. In contrast, in many emerging countries, financial infrastructures are less mature, investment products are not widespread, and savings are still mainly channeled into real estate or low-risk assets. Even in highly populated countries like India and China, the low level of stock market penetration (6–7%) shows that there is considerable growth potential, provided educational, technological, and institutional obstacles are overcome.”
The analysis of the absolute number of shareholders reveals significant differences between countries in terms of demographics and economic development. In North America, the United States dominates with more than 185 million investors, far ahead of Canada, with 19 million. In Asia, although the proportion of investors is lower, the volume is impressive due to population: China (98.7 million) and India (85.8 million) rank among the global leaders.
In Europe, the figures are more modest despite advanced economies: the United Kingdom (22 million) and Germany (11.8 million) stand out, while France has 10.2 million holders. In Latin America, Brazil stands out with 17.1 million investors, far ahead of its neighbors. Finally, in Africa, South Africa leads the list with 8.47 million investors, which contrasts with much lower figures in Morocco (189,500). These figures reveal the combined influence of standard of living, investment culture, and demographic weight.
U.S., India, and Brazil: The Three Best Stock Market Performers of the Last 10 Years
An analysis of annualized returns over the past 10 years shows that the United States, with the S&P 500, remains at the top with a return of 16.89%, making it one of the most profitable indices of the period. Emerging markets, especially Brazil and India, closely follow, with returns near 15.9%, offering attractive potential despite their volatility. Vietnam and New Zealand also stood out with respectable, though more moderate, returns (12.22% and 10.66%, respectively).
In contrast, markets such as the United Kingdom (2.67%) and Spain (1.65%) performed significantly worse, suggesting less dynamic growth during the period. Other European countries like Portugal (1.71%) and France (5.93%) also underperformed compared to their global counterparts.
The HelloSafe study analyzes, in a new report, the rate of household participation in the stock market across 32 countries worldwide. This study examines countries where households allocate a significant portion of their savings to equities and other investment products.
In periods of heightened market stress, volatility often dominates investor conversations. While traditional risk management techniques remain critical, the search for more stable return sources has led many investors to reconsider the role of private markets within diversified portfolios. Following the broad market selloff in 2022—when equities and bonds both delivered negative returns—attention has increasingly turned toward alternatives like private credit, which offer the potential for lower correlation to public markets and more consistent performance through cycles.
Understanding the Appeal of Private Credit
Private credit strategies generally involve lending to private companies through negotiated, illiquid transactions. Unlike public market instruments, these assets are not subject to daily price fluctuations driven by market sentiment. Instead, their valuations are typically informed by third-party pricing agencies using fundamental analysis to assess credit quality, cash flows, and comparable deal metrics. This methodology helps reduce the impact of short-term volatility and market noise. Even when broader credit spreads widen, private credit valuations tend to adjust more gradually due to the use of smoothing mechanisms over multi-month periods.
As a result, private credit has historically delivered more stable returns than many public asset classes. The Cliffwater Direct Lending Index (CDLI), a widely followed benchmark for private credit, reflects this trend—showing lower volatility and more consistent returns over the past decade compared to public equities and high yield bonds.
Performance Through Cycles
The resilience of private credit has been evident across a range of market environments. From the pandemic recovery period through the recent rate hiking cycle, the CDLI has continued to post positive performance, highlighting the asset class’s defensive qualities. In fact, even in years when public credit markets saw sharp drawdowns, private credit remained notably more stable.
Charts comparing CDLI performance with public market benchmarks further underscore private credit’s potential role as a stabilizing force in diversified portfolios. By offering downside mitigation and reduced mark-to.
Opinion by Frederick Bates, managing partner; y Juan Fagotti y Lucas Martins, partners Becon IM
If you wish to have a deeper dive into the Private Credit asset class, please feel free to reach out to info@beconim.com.
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.
The popularity of equally weighted ETFs is on the rise, with inflows into such strategies reaching net flows of $15.2 billion in 2024, a 289% increase compared to the $3.9 billion in 2023, according to Bloomberg data collected by JPMorgan Asset Management. However, according to an analysis by this firm, given the extreme levels of index concentration in the U.S. stock market, “it is crucial that investors fully understand the risks involved in shifting from a market capitalization-based approach to one based on equal weighting, particularly when active ETF options are also available.”
Divergences in Returns
Unlike the more traditional approach of weighting stocks based on each company’s market capitalization, equally weighted indices assign each stock the same weight in an index. Consequently, equally weighted ETFs give the same importance to all listed companies they invest in, regardless of their size. Therefore, they maintain underweighted positions in large companies and overweight positions in smaller names compared to their market-capitalization-weighted counterparts.
“Nonetheless, since the market capitalization and equal-weight versions of the S&P 500 have exactly the same components, historically the returns of both indices have been highly correlated,” according to JP Morgan AM’s analysis. More recently, however, this relationship has broken as the performance of the market-capitalization-weighted S&P 500 has been dominated by the Magnificent Seven. This handful of stocks currently represents about one-third of the market-cap-weighted S&P 500, but in the equally weighted index, where each of the 500 stocks receives only a 0.2% weight, the resulting allocation to the Magnificent Seven is just 1.4%.
The increasingly skewed risk profile of the two benchmark indices is leading to much greater differentiation in returns. The report notes that the strong market rotation in July 2024, for example, “helped the equally weighted S&P 500 post its strongest month in three years compared to its market-cap-weighted counterpart. At the same time, the traditional return correlation between the two indices hit its lowest level ever recorded.”
The Broadening of U.S. Equity Markets Favors an Active Approach
The study raises the possibility that the corporate earnings trends that have been driving the U.S. equity market may be starting to change, “with an earnings dynamic increasingly pointing towards a trend of earnings and results broadening.”
Thus, “it is likely that full-year 2024 earnings growth figures will continue to show a significant disparity between large-cap stocks and the rest, but the most recent quarterly results suggest that U.S. earnings are gradually becoming more evenly distributed across the market.”
The question, the firm notes, for investors is how best to position their portfolios to capitalize on these earnings trends. One way to do this is by investing in equally weighted ETFs, “which can offer diversification by reducing concentration in large-cap stocks.” However, this type of strategy “also introduces significant active risk without taking into account the differing prospects of individual companies.”
In contrast, the allocation to active ETFs, which allow portfolios to reflect strategic allocation decisions based on company fundamentals and market conditions, could lead to more optimal results. Active ETFs can offer tailored exposure to sectors and styles and potentially generate superior long-term returns, “while allowing investors to better align their portfolio exposure with their risk and return objectives,” as noted in the study.
Actively Investing in U.S. Equities with ETFs
Active alpha can play an especially critical role in equity portfolios when the future direction of the stock market is uncertain and more differentiated stock-level performance is expected. Currently, with the prospect of a broadening of returns in the U.S. equity market, active strategies can help investors access opportunities beyond the largest stocks.
An event held at the East Miami Hotel served as the perfect platform for the Brazilian holding Fictor, with stakes in food, financial services, and infrastructure, to announce its entry into the United States market through the opening of a new office in that Florida city. In this way, through Fictor US, the company expands its global presence. It already has a presence in Portugal.
The holding, with more than 3,000 employees and projected revenues of over 1 trillion dollars, will offer from North America products and services already proven in Brazil. The entry into the new market comes through its financial division. “The expansion is a strategic move aimed at generating revenue in strong currencies and expanding the proven business model,” the firm announced in a statement. The company’s business model is to invest its own capital and partner with local associates.
To support its entry into North America, Fictor recruited economist Jay Pelosky, one of the leading global investment consultants. Pelosky, former chief emerging markets strategist and global portfolio manager at Morgan Stanley, is currently principal advisor and director of TPW Advisory, an investment boutique based in New York specializing in global macroeconomics and portfolio strategy.
With experience in more than 50 countries, Pelosky played a key role in launching Morgan Stanley’s Latin American equity investment division, leading initiatives such as the Brazil Fund and the Latin American Discovery Fund. He has collaborated with Brazilian institutions such as Banco Itaú, in addition to leading macroeconomic strategies for Ohm Research. He is also a regular commentator on Bloomberg TV and Reuters.
“Entering the U.S. market is a major challenge, but also a great opportunity for Fictor. Having an expert like Jay Pelosky to guide our strategy gives us the confidence needed to navigate the U.S. economic landscape and accelerate growth. We expect the U.S. branch to contribute significantly to the group’s global revenues by 2030,” said Rafael Góis, partner and CEO of Fictor.
In the U.S., Fictor will launch operations by providing payroll-linked credit to the private sector starting in 2025, with $10 million in company capital.
“The strategy is to ‘test the model’ and, after the pilot phase, scale the operations,” Góis stated. “The target audience for this product is the lower-middle class and the working class in the United States,” he added.
The new U.S. office marks a natural evolution for the Brazilian holding, which seeks to strengthen its international presence and foster connections with investors and partner companies. Bruna Maccari, Managing Director, will lead Fictor US, supported by a team of American and Brazilian professionals.
Beyond the United States, Fictor has expanded its reach to other continents. Through an office in Lisbon (Portugal), opened last year on one of the city’s main avenues, the group has increased its participation in the local infrastructure and energy sectors.
Fictor’s energy division, Fictor Energia, announced in September 2024 that it will act as advisor to a renewable energy investment fund aimed at raising 50 million euros for innovative and profitable renewable energy projects in Portugal. The group also sponsors energy sector events, such as the Ibero-Brazilian Energy Conference (CONIBEN), held annually in Portugal’s capital.
Santander Private Banking International announced a new addition to its Miami team. The firm reported through the professional network LinkedIn the arrival of Eduardo Escardo, who will bring his experience — including more than a decade at J.P. Morgan — to the firm.
Escardo, they detailed, joined the company as Senior Banker and Executive Director. “On behalf of all of us at Santander Private Banking International, we warmly welcome Eduardo,” they added.
Before joining the Spanish parent company, the executive spent more than 11 years at J.P. Morgan. Starting his career at the investment bank as an Associate Banker, he rose to the position of Executive Director as of January 2022.
Previously, his eight and a half years at the insurance company Pacífico Vida marked the beginning of his career in the financial industry. At that company, he held roles in Lima, Peru, and Buenos Aires, Argentina. Before that, he worked as Junior Brand Manager at Intradevco Industrial.
In addition to earning his bachelor’s degree in business administration from the Universidad San Ignacio de Loyola, Escardo obtained his MBA from the Darden Graduate School of Business Administration at the University of Virginia.
AIS Financial Group announced in an email to its clients that, together with its partners at EBW, they will be covering the firm Monroe Capital, one of the most recognized private debt managers internationally.
“We know the importance that alternative investments have been gaining in portfolios recently, especially in these volatile environments. That is why we found it appropriate to bring a proven idea with many years of experience to the table,” the note says.
“At the same time, we are aware of the operational difficulties that these types of investments can cause, and therefore, we have ensured that it is easily accessible for all platforms, including iCapital and soon, using AIS‘s capabilities, an AMC, which will have a cumulative retail class,” adds AIS Financial Group.
Monroe Capital is a diversified provider of private credit solutions with $20.3 billion in assets. Protecting client capital against losses is at the core of Monroe’s philosophy, serving as the driver to consistently attract high-quality investment opportunities, which has enabled the Firm’s growth for nearly two decades.
AIS Financial Group was founded in 2016 as a Swiss investment boutique with the goal of offering advisory and customized solutions, mainly to independent advisors in Latin America, with a strong focus on structured products. Over time, it has expanded its asset offering to include investment funds, securitizations, and, more recently, a bond line.
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.
Photo courtesyHeinz Volquarts, Head of Americas International of State Street Global Advisors
In just 16 months, State Street Global Advisors’US Offshore business has tripled its assets, and the firm is now exploring the Brazilian market. In the longer term, the company is also eyeing other Latin American markets, said Heinz Volquarts, Managing Director and Head of Americas International (Canada, LatAm & Offshore) at State Street Global Advisors, in an exclusive interview with Funds Society.
Volquarts, who is based in New York, also highlighted the growing interest in industrial and defensive sectors due to market volatility and uncertainty, and noted the current flow into European equities.
He also said that the ETF-focused asset manager has no plans to expand its distribution agreements in Latin America, although it believes in strategic partnerships like those it already maintains with Blackstone, Apollo, Nuveen, DoubleLine, and Bridgewater for actively managed ETFs. He predicted the ETF industry is well positioned for continued growth, pointing to the low cost of ETFs as a key differentiator in the sector.
Market Decline and Rotation
Tariff-related uncertainty has triggered volatility in global equities and a rotation into other asset classes and markets. In the interview, Volquarts explained that although State Street offers a broad range of equity products, the firm has also grown its fixed income offerings in recent years.
“In recent weeks, we’ve seen increased demand from clients for investment ideas and sector positioning. Clients are looking to position themselves in more defensive sectors—those less damaged or impacted by tariffs. Ultimately, this has created an opportunity to be more defensive,” he said.
Volquarts also pointed out another clear shift: rising demand for ex-U.S. products. “Europe is the area where we’ve seen the most interest, with flows into European equity products. Latin American clients are also beginning to look at European and industrial sectors,” he added.
State Street’s Numbers in Latin America
Regarding regional ETF demand, most comes from institutional clients, mainly Afores and AFPs, which account for 75% of the demand, explained Volquarts, who graduated from Mexico’s Instituto Politécnico Nacional (IPN) and holds postgraduate degrees from Universidad Anáhuac.
In Mexico, the business with Afores continues to grow at an annual rate of 10% to 15%, while in Colombia it’s growing at 10%, with State Street gaining market share. In Chile and Peru, growth has been organic, primarily through AFPs.
However, Volquarts emphasized that in Peru, the Wealth Management business has been the main growth driver, fueled by demand from family offices. “Peru has been a positive surprise for us in the wealth segment. While AFPs have seen some withdrawals in recent years, private banking has grown significantly,” he said.
The State Street executive described “a train that other countries are now boarding” as they begin to open offshore accounts. He specifically referenced Brazil: “We’re seeing money coming into Miami from Brazil, which is a relatively new trend.”
The firm already has assets in Brazil, where State Street Global Markets has a strong presence. However, the company plans to proactively cover the Brazilian market. “Institutional demand locally in Brazil isn’t very strong yet, but we’re exploring it,” he told Funds Society.
In Mexico, “RIAs have grown significantly, with positions in both domestic and offshore accounts. Most of the flows have moved to the U.S. offshore market,” he explained.
“We currently have proactive Offshore Wealth coverage, led by Diana Donk in the US Offshore Market, and Argentina and Uruguay are on our radar for the coming years,” he added.
Leaders in Low-Cost Products
In the interview, Heinz Volquarts emphasized: “We want to be competitive and offer our clients access to our portfolios at competitive prices. We are one of the market leaders in low-cost products, but we offer many other options; we’re competitive in sectors and also have active products.”
State Street Global Advisors has reached agreements with other asset managers for specialized strategies, such as the SPDR Blackstone Senior Loan ETF, which has more than $6 billion in AUM and has been running since 2013, and the recently launched SPDR Bridgewater All Weather ETF—“a multi-asset strategy that’s perfect for a volatile environment like the current one,” noted Volquarts. These are actively managed ETFs, currently available only in 40Act format.
Speaking specifically about the US Offshore business, he said that the firm has been actively working in this area for the past 16 months and has tripled its assets during that time. He also said that State Street continues to work with major wirehouses (UBS, Morgan Stanley, Merrill Lynch, among others), with the private banking segment using UCITS strategies, which have been well received by RIAs.
Volquarts also identified three clear market trends: currency-hedged strategies, low-cost products, and model portfolios using ETFs. In terms of distribution, LatAm is covered through Credicorp (Andean region), and in Mexico they have a sales director, Ian López.
The executive sees no signs of slowdown in the ETF industry, which has been growing rapidly in recent years. “The sector is expected to continue growing at a fast pace,” he said, citing a compelling figure: “There’s still a lot of money in mutual funds. In Canada, out of the $3 trillion invested in mutual funds, only 18% is in ETFs.”
