Navigating Market Volatility: The Impact of Tariffs on Investment Portfolios

Wednesday 12 March, 2025

Global markets have experienced increased volatility in recent weeks, with significant fluctuations in the US equity market. While the FTSE and European markets have demonstrated relative resilience, uncertainty surrounding tariffs and trade policies has led to concerns for investors, particularly those with overseas exposure in their portfolios.

In this article, Financial Adviser in St Albans, Simon Hawker looks at the challenges of the current investment market with all the changes that are occurring on an almost daily basis.

One of the key drivers of this turbulence has been the shifting stance on tariffs, especially in the United States. The unpredictability of trade negotiations has unsettled businesses and investors alike.

Markets thrive on stability, and when uncertainty prevails, we often see heightened fluctuations in asset prices. This can have a direct impact on investment portfolios, especially for UK investors holding funds with international exposure.

The Effect on Investment Portfolios

Recent market movements highlight how investor sentiment can shift rapidly in response to trade policy changes. For instance, the technology sector, which had seen substantial gains over the past few years, has been particularly impacted by tariff-related concerns. With these stocks previously trading at high valuations, any perceived risk can trigger significant profit-taking and sector-wide corrections.

For UK investors, currency fluctuations add another layer of complexity. With sterling investors experiencing an additional drag due to dollar weakness, the real impact on UK-based portfolios with US exposure has been more pronounced. This reinforces the importance of a diversified investment approach, ensuring portfolios are not overly reliant on any single region or sector.

Tariffs: Short-Term Disruption or Long-Term Change?

It is essential to remember that while tariffs can introduce significant short-term market volatility, they are often subject to ongoing negotiations. Trade policies may be revised or reversed, altering the investment landscape once again.

Reacting impulsively to market movements can therefore be detrimental to long-term investment strategies. Instead, maintaining a well-balanced and globally diversified portfolio can help mitigate risks associated with regional market fluctuations.

The Importance of Professional Financial Advice

In times of market uncertainty, seeking guidance from a professional financial adviser is crucial. Investment decisions should be based on a long-term strategy tailored to individual financial goals rather than short-term market reactions.

A financial planner can provide valuable insights into asset allocation, risk management, and diversification strategies that align with changing global conditions.

At Lonsdale, we advocate a structured, multi-factor investment approach, recognising that market conditions will shift over time. By carefully assessing risks and opportunities across different asset classes, we help clients navigate periods of volatility with confidence.

If you are concerned about how tariff policies and market fluctuations may impact your investments, seeking professional advice can ensure your portfolio remains aligned with your financial objectives. The investment landscape will continue to evolve, and having a clear, informed strategy is key to long-term financial success.

Please note: The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested. The contents of this article are for information purposes only and do not constitute individual advice. As a mortgage is secured against your home or property, it could be repossessed if you do not keep up the mortgage repayments.

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