Sustainable Investment Remains Strong Thanks to Europe and Its Ability to Adapt to Political Cycles

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Despite Donald Trump’s return to the White House and the rise of right-wing parties in Europe, asset managers remain optimistic about the outlook for sustainable investment this year. So far, sustainable investment funds have shown significant growth in recent years. According to 2023 data, these funds reached approximately €500 billion in assets under management, with Europe accounting for 84% of this total—around €420 billion.

How Do Investment Firms View 2025?

According to Pascal Dudle, Head of Thematic and Impact Investing at Vontobel, sustainability will remain important despite challenges posed by recent political shifts. It will be driven by companies maintaining their commitment for reasons ranging from economic opportunities to risk management.

“A key example of this was the unexpected yet encouraging support from ExxonMobil’s CEO during COP29 in November, urging incoming President Trump not to exit the Paris Agreement and to keep the U.S. Inflation Reduction Act (IRA) intact. 2025 will also see continued investor scrutiny of the myriad ESG approaches being offered, with stricter strategies, such as impact investing, likely among the winners,” says Dudle.

He also believes that energy transition is here to stay, as clean technologies are now economically viable, scalable, and come with limited technological risk. “The need for reliability and resilience should, in particular, drive investments in infrastructure, such as increasing investment in power grids to ensure their reinforcement and modernization,” he adds.

Trump’s Challenge to Sustainable Investment

While investors—and Europe—continue their shift towards sustainability, the Trump administration has taken a different path. His first term was marked by rollbacks in environmental protections, the U.S. withdrawal from the Paris Agreement, and skepticism toward climate science. These policies affected the global sustainable finance ecosystem, meaning his return could once again test the resilience of ESG investment.

In his second term, Trump has declared a “national energy emergency,” in line with his campaign promises. According to experts at Allianz Global Investors, the measure aims to strengthen the U.S. fossil fuel sector, the world’s largest oil producer, and cut energy prices by 50%.

“His actions will complicate the fight against climate change. Additionally, skepticism surrounds Trump’s ability to halve energy prices as he claims. During the 2020 pandemic, even when oil prices turned negative, U.S. energy costs only dropped by 19%. Other factors, such as his order to replenish the Strategic Petroleum Reserve, could even push prices up in the short term,” state Greg Meier, Senior Economist at Allianz Global Investors, and David Lee, U.S. Energy Sector Specialist at Allianz GI.

Their conclusion is clear: “While Trump’s actions reinforce his commitment to fossil fuels, their actual impact on lowering energy costs will likely be limited and far from his stated expectations.”

Key Takeaways for Investors

In this context, Sophie Chardon, Head of Sustainable Investment at Lombard Odier Private Bank, believes investors should focus on sectors less exposed to political shifts, such as infrastructure, digitalization, energy efficiency in buildings, water management, and precision agriculture.

“From an investment perspective, Trump’s second administration could increase sectoral and regional divergence as the U.S. loses momentum in sustainable investments. After the sharp declines in sustainable investment valuations in late 2024, earnings dynamics are now in control, making stock selection crucial,” Chardon explains.

She also highlights that while the U.S. may slow its climate efforts under Trump, global momentum—especially from China and the EU—should keep the transition to green energy moving forward.

“Investors will need to focus on sectors that are less exposed to policy risks and on those aligned with long-term demand for clean technologies, infrastructure, and climate resilience,” she insists.

Europe’s Advantage in ESG Investment

According to Deepshikha Singh, Head of Stewardship at Crédit Mutuel Asset Management, investment prospects remain uneven.

“Investors may witness significant rollbacks in federal climate action and reporting standards. Trump’s pick to lead the SEC, Paul Atkins, has been openly opposed to the SEC’s climate disclosure rules. However, states like California and New York will likely continue setting ambitious climate goals,” Singh states.

Despite this, Singh sees Europe maintaining its leadership in sustainable investment, which could be a key advantage for investors.

“European companies that align with strict ESG regulations could attract more capital, while U.S. companies struggling to meet international standards could face higher costs and reduced access to foreign markets. The alignment of the European financial sector with the Paris Agreement and COP29 goals presents opportunities for those prioritizing green investments.

Additionally, Europe may seek to influence global financial markets by expanding ESG disclosure requirements for internationally operating companies, which could impact U.S.-based multinationals and other global corporations,” Singh explains.

The Future of ESG Investment Amid Political Cycles

For Singh, sustainable investment’s resilience lies in its ability to adapt to political cycles. While she acknowledges that Trump’s policies may pose challenges for some aspects of ESG investing, she sees it as unlikely that the overwhelming global shift toward sustainability will be reversed.

“Investors, driven by both risk management and opportunities, will continue to integrate ESG factors into their portfolios, even in the face of opposition. The demand for transparent and responsible investments will persist, regardless of who is in the White House.

In fact, Trump’s second term could even emphasize the urgency of private-sector leadership in driving the sustainable investment movement in the U.S. and beyond,” Singh concludes.

Jupiter Asset Management Presents Its First Actively Managed Global Sovereign Debt ETF

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Jupiter Asset Management has announced the launch of the Jupiter Global Government Bond Active UCITS ETF, the Group’s first exchange-traded fund (ETF), in collaboration with HANetf, a specialist in white-label ETFs.

Jupiter has been exploring new ways to distribute its products and expand access for more clients to its extensive investment expertise. With greater execution flexibility, a high degree of transparency, and competitive pricing, active ETFs offer clients an alternative and democratized entry point. In line with Jupiter’s truly active high-conviction investment management approach, active ETFs also provide investors with the potential for higher returns than traditional passive products.

The Jupiter Global Government Bond Active UCITS ETF, or GOVE, aims to outperform traditional sovereign bond investments by offering a diversified portfolio of developed and emerging market government debt, with low correlation to equities and other risk assets. Due to their complexity, potential for market inefficiencies, and sensitivity to macroeconomic factors, global sovereign bonds represent an ideal asset class for an active ETF.

The fund is managed by Vikram Aggarwal, a sovereign debt investment manager who has been with Jupiter since 2013. The fund’s investment strategy focuses on identifying inefficiencies in sovereign bond market valuations by comparing Jupiter’s perception of the current economic regime with market expectations. This contrarian approach seeks to capitalize on opportunities when there is a significant divergence between perceived and actual economic conditions.

“We are pleased to partner with HANetf for the launch of our first active ETF. We have been exploring new ways to provide clients with access to Jupiter’s extensive investment expertise, and today’s launch is part of that strategy. We know that greater transparency, faster execution, and competitive pricing are driving clients to increase their exposure to active ETFs. We believe Jupiter’s truly active investment approach and differentiated product offering position us very well to grow assets in this exciting new space,” said Matthew Beesley, CEO of Jupiter.

Hector McNeil, Co-Founder and Co-CEO of HANetf, stated: “We are delighted to work with Jupiter on its first active ETF at this pivotal moment for the market. Net inflows into active ETFs from European clients increased by more than 50% between Q1 and Q2 of 2024. Total assets under management in Europe now exceed $41 billion, and as clients increase their allocations, we are seeing very strong growth momentum.”

The DDC Global Investor Summit 2025 Returns to London in March

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In its tenth edition, the DDC Global Investor Summit 2025 returns to London on March 12 and 13, 2025, consolidating itself as one of the most outstanding events in the alternative investment industry. The gathering will take place at the iconic Royal Horseguards Hotel, a luxury setting designed to host a select audience of around 200 attendees, including prominent investment funds, institutional investors, and family offices from around the world.

London, the epicenter of alternative investments

London is the perfect venue for this global event, positioning itself as a worldwide hub for alternative investments, with a growing industry and an ecosystem that encompasses private equity funds, private credit, real estate, and hedge fund strategies, consolidating its reputation as a financial epicenter in Europe.

The DDC Global Investor Summit, in this context, stands out as a boutique space where industry leaders share insights on how to build diversified and resilient portfolios in a constantly changing economic environment.

Global perspectives and leading companies on stage

Unlike other events, the DDC offers a comprehensive and global vision of the industry, exploring key markets such as Europe, the United States, and Brazil, with the participation of globally recognized leaders. Among the companies confirmed for the program are high-impact names such as KKR, McKinsey & Company, Oaktree Capital Management, and Adams Street Partners, among others.

Over the course of the two-day event, there will be a total of 20 panels designed to address cutting-edge topics. This year, innovation will be a central element, with the incorporation of specialized 20-minute panels, where experts will share in-depth analyses and insights on key trends in a dynamic and agile manner.

Relevant topics for the alternative investment industry

The panels will cover a wide variety of topics, including ESG investment (integrating sustainability into profitable strategies), distressed debt and NPLs & REOs (exploring opportunities in distressed assets), the future of private credit: trends and strategies for a growing sector, asset-backed lending (new asset-based financing alternatives), and finally, innovative solutions in credit recovery (maximizing recovery in a challenging context).

High-level networking

The DDC Global Investor Summit 2025, in addition to addressing the most relevant topics in the industry, is a unique opportunity to create meaningful connections in the alternative investments sector. Thanks to an exclusive app for attendees, it will be easy to connect with key profiles, schedule meetings, and build high-impact relationships. All this with a user experience designed to maximize efficiency and networking.

The key to success: exclusivity and personalization

According to Paola Ortega, Managing Partner of DDC Financial Group, “the success of the DDC lies in the exclusivity of the gathering. We have seen that the effectiveness of massive events in this industry is increasingly lower, as such high-level profiles must be treated with the personalized attention each one deserves. The great deals that result from these meetings derive from pre-event profiling, ensuring that participants interact at the same executive level.”

Strategic partnership

Funds Society has joined as a Media Partner for these events, and as such, its subscribers have the benefit of a 20% discount on ticket purchases by presenting the discount code: DDCFUNDS20

AIM Summit London Edition 2025: The Leading Alternative Investment Summit

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AIM Summit London Edition 2025, one of the most important events for the alternative investment community, will take place from May 19-20. This edition will bring together over 500 fund managers, institutional investors, family offices, sovereign wealth funds and financial associations, as well as more than 70 leading speakers, offering an unrivaled platform for insightful discussions and exceptional networking opportunities.

As a platform that goes beyond traditional boundaries, AIM Summit provides a unique opportunity to explore a wide range of alternative investment classes, including private equity, venture capital, hedge funds, digital assets, fintech, artificial intelligence or blockchain, among other topics.

The summit is designed to provide in-depth analysis on market dynamics, regulatory landscape and investment strategies, ensuring attendees are well prepared to navigate the complexities of the alternative investment space.

📩 For more information, contact: info@aimsummit.com.

Economic Strength, Monetary Policy, and Disinflation: Three Arguments in Favor of Emerging Markets

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Mercados emergentes y fortalezas económicas

The new Donald Trump administration brings uncertainty to emerging markets. However, investment firms believe it is essential to look beyond this and remember that these regions have stronger markets and that the Federal Reserve‘s monetary policy continues to favor risk assets.

According to Kirstie Spence, portfolio manager at Capital Group, many of the major emerging markets can leverage various tools: higher reserve volumes, positive real interest rates with room to decline, fewer imbalances than developed markets, and exchange rates that are fairly valued or undervalued.

“They have policy flexibility to weather the storm if needed. Except for the less consolidated economies, external balances are solid. Additionally, inflation is trending downward in a restrictive monetary policy environment. Fiscal indicators are often a weak point for these markets, but most major emerging markets have extended their debt maturity profile and are now issuing more in local currency,” argues Spence.

She also notes that a Federal Reserve less inclined to cut rates could put pressure on central banks in less developed emerging economies, making it difficult for them to maintain higher interest rates, especially in countries concerned about inflation and financial stability risks. “In more developed emerging markets, particularly in the Asian region, central banks have shown greater confidence in getting ahead of the Federal Reserve, given the absence of systemic pressures on financial systems and the development of deeper, more liquid domestic markets,” she adds.

According to Claudia Calich, Global Head of Emerging Debt at M&G, it is interesting to analyze that the disinflation story in emerging markets is practically complete, with few exceptions in high-inflation countries such as Argentina, Turkey, Egypt, and Nigeria. “It is remarkable how poorly Latin America performed in 2024, affected by both currency depreciation and rising yields. There is much less room for rate cuts, given the expected inflation path in most inflation-targeting economies. However, there is potential for a yield rebound if country-specific concerns ease, such as improved fiscal prospects in Brazil or greater clarity on trade between the U.S. and Mexico, and if currencies stabilize or recover some of the depreciation seen in 2024,” says Calich.

Implications for Investors

Given this backdrop, asset managers are looking for investment opportunities in emerging markets, with debt being one of the most analyzed areas. According to M&G’s expert, local currency bonds in emerging markets remain underappreciated, which could be a good signal for contrarian investors willing to step in and endure some volatility. “However, high short-term interest rates in key markets like the U.S., U.K., and, to a lesser extent, the Eurozone, remain a hurdle for this asset class, and global macroeconomic uncertainty doesn’t help. Local currency bonds in emerging markets still face strong competition from high short-term rates in the U.S., U.K., and Eurozone. This could improve in the future as central banks continue easing, but the risk of ‘higher for longer’ rates remains, especially if U.S. inflation expectations deteriorate due to tariffs,” she explains.

Additionally, M&G acknowledges that they remain selectively constructive on emerging market currencies, as their valuations have become even more attractive after last year’s sell-off. “However, timing the right moment to act is complex, as the fate of the U.S. dollar will largely depend on the policy mix adopted by the new administration,” Calich notes.

The Heavyweights

When discussing investment opportunities, Chris Thomsen, portfolio manager at Capital Group, highlights two “heavyweights”: India and China. In his view, both emerging markets have followed very different trajectories over the past five years, with Indian equities significantly outperforming Chinese equities.

“Valuations reflect these differences. While both markets offer attractive opportunities, they come with their own risks and investment drivers. The increasing penetration of mobile phones among India’s young and vast population has benefited telecom companies like Bharti Airtel, but the high valuation levels make selectivity crucial,” explains Thomsen.

On the other hand, he points out that China’s massive domestic consumer market could be boosted by government stimulus measures, creating opportunities for well-positioned digital companies. “Some companies like Tencent and NetEase hold dominant positions, have strong cash flows, and high-quality management teams. However, investing in China remains risky due to ongoing tensions with the U.S. and the trade priorities of the new Trump administration,” says the Capital Group manager, adding that the reconfiguration of global supply chains presents opportunities in Brazil, Mexico, and Indonesia.

The Industry Will Increase Its allocation to Venture Capital, Private Multi-Asset Solutions and Infrastructure

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Inversión en capital de riesgo y activos privados
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The increasing allocation to private markets in response to market evolution by wealth managers and financial advisors is a clear trend in the industry. In fact, according to the Global Investor Insights Survey (GIIS) by Schroders, more than half of these professionals are currently investing in private markets, with an additional 20% expecting to do so within the next two years.

The survey, which includes 1,755 wealth managers and financial advisors globally—representing $12.1 trillion in assets—reveals that private equity (53%), private multi-asset solutions (47%), and renewable infrastructure equity (46%) are the top three private market asset classes where advisors and wealth managers expect their clients to increase allocations in the next 1-2 years.

Regarding how they expect client allocations to private market asset classes to change over the next 1-2 years, two-thirds of wealth managers and financial advisors highlight the potential for higher returns compared to public markets as the primary benefit of private market investing for their clients. This was closely followed by the ability to achieve diversification through different return drivers (62%). Additionally, on average, most investor allocations to private markets represent between 5%-10% or 1%-5% of their total portfolio exposure.

 

According to Carla Bergareche, Global Head of Wealth Management at Schroders’ Client Group, while many wealth managers and financial advisors are already investing in private markets on behalf of their clients, allocation sizes remain significantly lower than the 20% or more seen in family office and institutional investor portfolios.

“This gap represents a significant opportunity to strengthen client engagement with private markets. We therefore expect these markets to play an increasingly important role in wealth investment portfolios as investors become more aware of the potential for strong and diversified returns,” explains Bergareche.

Access to Private Market Investments

Another key finding is that just over half of surveyed wealth managers and advisors indicated that they access private market opportunities through exchange-traded funds, closely followed by semi-liquid or open-ended indefinite-duration funds (51%). Despite these opportunities, lack of liquidity is cited as the main challenge when discussing private markets with clients.

According to Schroders, 49% of respondents stated that greater financial education for clients would help drive demand, followed by better-suited product structures (42%) and lower investment minimums (42%).

“There is no doubt that private wealth will play a very significant role in private markets in the future. Until now, wealth managers and advisors have had limited options to access these markets compared to their institutional counterparts, which explains why, despite their intent, we still see relatively low allocations,” says Tim Boole, Head of Private Equity Product Management at Schroders Capital.

However, in his experience, the emergence of new vehicles, such as semi-liquid funds, has expanded available access points, representing a significant advancement in providing greater flexibility for investors to achieve their financial goals through private markets. “It’s no surprise that these structures are favored by this client segment,” Boole adds.

Wealth Transfer as a Key Priority

Additionally, the firm highlights that wealth transfer has been identified as a priority for 59% of wealth managers and financial advisors worldwide. In North America, 66% consider it a priority, compared to 57% in the UK, 57% in Asia-Pacific, and 58% in EMEA.

The report shows that wealth transfer discussions are more deeply embedded in the Americas. Specifically, Latin America has the highest level of engagement globally, with 58% of advisors stating they have addressed this topic with more than half of their clients. In EMEA and Asia-Pacific, participation is lower, with 43% and 46% of advisors engaging in these discussions, primarily due to cultural sensitivities.

From the Visible to the Invisible: The Impact of Tariffs on the Market, Assets, and Portfolios

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Impacto de los aranceles en mercados y carteras
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After a few weeks of intense market reactions to Donald Trump’s statements, investors have shown they can tolerate the volatility his words generate. “Throughout the week, the market has focused more on the positives than the negatives. In all cases, it seems that the parties have given themselves time to negotiate—the new Chinese tariffs will take effect on February 10—allowing stock markets to resume their upward trend on Tuesday. Additionally, inflation fears remain under control, which has strengthened fixed-income markets, especially longer-duration bonds,” analysts at Banca March noted.

For Yves Bonzon, CIO of Julius Baer, the U.S. stock market no longer fears potential tariffs, seeing them merely as a negotiation tool for Trump to extract benefits from the involved governments. “We now know that the president views the stock market as one of the best indicators of his policy success. He cannot ignore the consequences of imposing tariffs of this magnitude on U.S.-Mexico-Canada Agreement partners. If we add trade with Mexico and China, which currently faces 10% tariffs, nearly half of U.S. imports are now subject to these new levies,” explains Bonzon.

This perspective aligns with the views of Samy Chaar, Chief Economist and CIO Switzerland at Lombard Odier, and Luca Bindelli, Head of Investment Strategy at the firm: “Trump’s White House is deeply challenging the post-1945 global order, but for now, policy initiatives are mostly aligned with campaign rhetoric. As a result, our baseline expectations for the U.S. economy and markets remain unchanged.”

Experts at EDM also note that despite macroeconomic and political uncertainties, equity investors have remained optimistic, pushing stock prices higher (S&P 500 +4.0%; MSCI World +3.6%). “However, gains are starting to be more diversified than in 2024, which was characterized by a strong concentration in tech-driven returns. Bond markets are seeing rising yields due to higher medium- and long-term inflation expectations, fueled by negative price adjustments. There is no doubt that concerns over the growing U.S. debt are behind this increased demand for higher returns,” EDM stated in its latest report.

Market Outlook

According to MFS IM, global equity markets have not yet fully priced in significant downside risks. The firm argues that, in general, tariffs—if implemented as currently expected—will negatively impact stocks, primarily reflecting concerns about a combination of slower global growth and higher interest rates. “This is evident in price action, or how stock prices reacted immediately after the U.S. announcement,” they explain. However, MFS IM emphasizes that when assessing broader market implications, it is crucial to differentiate between companies based on their export exposure.

Conversely, in fixed-income markets, MFS IM believes the risk of a trade war had already been fully priced into global bond markets. “One of the most pronounced transmission channels has been the currency markets, with the Canadian dollar and Mexican peso suffering sharp losses against the U.S. dollar. Both currencies have since recovered due to negotiations that delayed tariff implementation,” they acknowledge.

Regarding U.S. fixed income, MFS IM believes this latest development will likely further constrain the Federal Reserve’s ability to ease policy in the future, given the potential impact of a one-off price adjustment on domestic inflation. “As a result, initial interest rates are likely to rise, triggering some flattening of the yield curve,” they indicate.

For Connor Fitzgerald and Schuyler Reece, fixed-income portfolio managers at Wellington Management, during times of market uncertainty, investors tend to flock to safe-haven assets, causing demand for U.S. Treasury bonds to surge. “We believe the best time to consider Treasuries is before volatility hits. If fixed-income portfolios already contain U.S. Treasuries when negative market events occur, investors can dynamically rotate their allocations, anticipating the shift from credit to Treasuries, and execute transactions at potentially more attractive levels on both sides of the trade,” they argue.

Chaar adds: “We expect 10-year Treasury yields to settle around 4.5% over the next 12 months, suggesting limited pressure on equity valuations. We maintain our preference for corporate bonds, which should offer higher yields than government bonds for comparable maturities. In fact, U.S. corporate bonds should still benefit from a likely pro-growth agenda in the U.S. (through deregulation and tax cuts) and relatively stable spreads, whereas government bonds may continue to face challenges due to rising budget deficits and refinancing needs, increasing yield volatility.”

Flexible Portfolios

From a portfolio management perspective, the current situation underscores the importance of remaining flexible and maintaining composure in the face of volatility, as such periods are often accompanied by excessive noise and fluctuating headlines. “While we remain attentive to news flows, we do not believe current market movements have created opportunities for significant changes in our asset allocation,” states Felipe Villarroel, portfolio manager at TwentyFour AM (a Vontobel boutique).

Regarding long-term implications, Villarroel believes it is too early to determine how the balance of power will shift under Trump’s administration. “That said, we believe U.S. exceptionalism and its enduring status as a safe-haven asset and recipient of foreign capital are partly due to the predictability of its policies. Today, market sentiment on this has not changed, but there may come a point where investors start feeling uneasy. These characteristics are also factored into credit rating agencies’ assessments and influence the ongoing evaluation of a country’s AAA rating. We doubt rating agencies will react to Trump’s initial salvos; however, if tariffs remained in place, GDP growth assumptions would change, potentially triggering a review,” Villarroel concludes.

GAM Investments Hires a New European Equity Team

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GAM Investments y nuevo equipo de renta variable
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GAM Investments has announced the addition of three professionals from the European equity team at Janus Henderson Investors. According to the asset manager, “these strategic hires reinforce GAM’s commitment to providing clients with access to the highest quality in investment, along with exceptional results.”

The team will be led by Tom O’Hara, alongside Jamie Ross and David Barker, also from Janus Henderson. The three bring extensive experience, having managed over 6.5 billion euros in European equity funds for institutional and retail clients worldwide. According to the firm, these professionals will join GAM in the coming months.

Following the announcement, Tom O’Hara stated: “For decades, GAM has attracted some of the best talent in the industry for the benefit of its clients. Its strong track record in European equities has directly shaped my approach to investing. I take on this new challenge with pride and look forward to contributing to GAM’s sustainable long-term growth.”

Meanwhile, Elmar Zumbuehl, CEO of GAM Group, commented: “We are delighted to welcome Tom, Jamie, and David to GAM. We are confident that their extensive experience and proven investment success will be a valuable asset to our firm. Attracting such outstanding investment professionals highlights GAM’s distinctive and appealing culture, our strategy, and our long-term commitment.”

Trump’s Policy and Central Bank Demand: Bullish Factors for Gold

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Trump, bancos centrales y oro
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After a pause in December, gold reached new all-time highs, outperforming all other asset classes in 2024. This upward trend has continued in 2025, and by the end of January, gold had broken its own records, reaching $2,798.40 per ounce. According to experts, this strong performance is driven by its demand as a safe-haven asset amid geopolitical uncertainties and concerns about the impact of tariffs imposed by Donald Trump’s administration on the global economy.

“Global gold demand was much stronger toward the end of last year than available data suggested. The World Gold Council’s demand trends for the fourth quarter of 2024 showed strong growth in investment demand and central bank purchases, which further reinforced bullish sentiment in the gold market and pushed prices to a new all-time high,” explains Carsten Menke, Head of Next Generation Research at Julius Baer.

According to Ned Naylor-Leyland, investment manager for gold and silver at Jupiter AM, the gold market is currently in a bull phase, but the broader market has not yet fully participated, which suggests there is still room for further gains. He notes that gold mining companies have increased production and profit margins, but their stock prices have not risen at the same pace.

The Impact of Tariffs

According to Menke, global gold trade between the U.S. futures market and European physical markets could be affected by the tariffs Trump has threatened to impose. “This is creating uncertainty among gold traders and widening the price gap between New York and London. In theory, tariffs—if implemented—should not alter the long-term supply and demand balance in the global gold market or international benchmark prices. That said, if market imbalances arise in the short term due to tariffs, prices will need to signal the need to attract sufficient supplies to the U.S.,” he explains.

In this regard, Menke argues that the fundamental impact on global gold demand would be more related to prolonged trade tensions, which could be one of the bullish factors of Trump’s presidency. “Overall, we believe his administration could generate a wide range of possible outcomes, both bullish and bearish. Our outlook on gold remains positive, primarily based on the resumption of central bank purchases rather than Trump’s presidency,” he clarifies.

The Role of Central Banks

Another key factor supporting gold’s rally is that several major central banks, including the European Central Bank, the Bank of Canada, and Sweden’s Riksbank, are implementing interest rate cuts, increasing gold’s appeal. Although the Federal Reserve decided to keep rates unchanged, investors anticipate two additional rate cuts this year, which could also support the metal’s price.

“Countries like China, India, and Turkey have increased their gold reserves to diversify assets at the expense of the U.S. dollar. Globally, central banks purchased 694 tons of gold in the first few months of the year; in November, the People’s Bank of China announced it would resume gold purchases after a six-month pause,” notes Diego Franzin, Head of Portfolio Strategies at Plenisfer Investments, part of Generali Investments.

According to Franzin, monetary policy decisions also play a crucial role in the gold market. “During the phase of rising interest rates, gold was the ultimate hedge against inflation, which monetary policies were fighting. In the current phase of rate cuts, gold continues to offer an alternative to other asset classes, although the cost-benefit ratio of holding gold has increased. Gold prices saw a slight dip after the Fed’s rate cut in December. However, it is worth noting that the U.S. central bank also indicated that next year’s rate cuts would be slower than previously expected,” he states.

Outlook

Considering these factors, some experts, such as Franzin, estimate that gold could reach $3,000 per ounce, supported by the continuation of the aforementioned trends and a potential resurgence of inflation driven by fiscal and trade policies under the new Trump administration. “There are also expectations of another increase in U.S. public debt,” he adds.

“Beyond central bank purchases, gold market demand has been largely driven by sophisticated investors, such as hedge funds and algorithmic traders, who have pushed gold futures higher,” adds the Jupiter AM manager.

At Plenisfer Investments, they believe that regardless of short-term price trends, gold will continue to play several key roles in an investment portfolio in 2025. *”It will remain a strong diversification element, helping to reduce portfolio volatility due to its low correlation with other assets. It will continue to offer protection against inflation, which historically occurs in waves and could persist, particularly in the U.S., above the levels currently expected by markets.

Lastly, it will remain a safe-haven asset in times of economic or geopolitical uncertainty,” concludes Franzin.

Trump’s Tariff Game: Beware of Missteps and Noise

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Aranceles de Trump y su impacto económico
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One of the key recommendations made by international asset managers at the beginning of the year was the need to filter out the noise surrounding Donald Trump‘s approach to policymaking. The trade war launched by his administration, which has put the word “tariff” in most headlines since yesterday, is a clear example of why investment firms gave that advice.

If we look at the latest developments, China has imposed tariffs on U.S. products set to take effect on February 10. Specifically, it has announced a 15% tariff on coal and liquefied gas and a 10% tariff on oil, agricultural machinery, high-displacement cars, and pickup trucks. Canada’s response was similar, with Prime Minister Justin Trudeau announcing 25% tariffs on U.S. products. Meanwhile, after a “friendly” phone call with Claudia Sheinbaum, president of Mexico, Trump has decided to pause the 25% tariffs on the country for a month in exchange for a series of commitments on border and trade security.

Time to Negotiate?

According to experts, this first move in the trade war by all parties confirms what many had anticipated: tariffs will be used as a bargaining tool. “As we predicted, Trump is starting his term by using trade policy decisions as a shock weapon within a broader framework of future negotiations, allowing him to partially rebalance trade with some economies. We already saw this tactic during the NAFTA renegotiation when Trump’s threats to withdraw from the trade alliance successfully pressured for a new agreement,” state analysts at Banca March.

Experts at the firm believe that China, having already experienced a trade war, is less inclined to give in to such pressure. Trump is now expected to speak with Chinese President Xi Jinping in the coming days, raising hopes that both leaders may reach an agreement to avoid a new trade war.

For Damian McIntyre, Head of Multi-Asset Solutions at Federated Hermes, these announcements signal to the world that Trump is willing and able to use tariffs as a tool. “While this could ultimately be a negotiation tactic, it has the potential to reshape global investment narratives, including the need for higher risk premiums for countries he perceives as unfair players. Whether it’s tariffs and geopolitical tensions or AI and profits, investors face many risks in today’s market. We believe that investing in a globally diversified range of assets is one way for investors to maintain strong and resilient portfolios,” says McIntyre.

In this context, asset managers are focusing on the imbalances in public accounts and their impact on national economies. “Contrary to what Trump’s rhetoric suggests, it is not the exporting countries that pay the tariffs. U.S. importing companies pay these tariffs to the Treasury. Mechanically, the first impact will be on U.S. companies. For the end consumer, an increase in customs duties has a macroeconomic effect similar to that of a tax hike. It has a temporary impact on inflation and a downward effect on demand, which tends to push prices lower. The main risk, therefore, is a demand-driven growth shock rather than an inflation shock,” explains Enguerrand Artaz, analyst at La Financière de l’Échiquier.

“Trump knows that an open trade war would mean higher inflation for the average U.S. citizen, something he will likely want to avoid in the end. Meanwhile, we must get used to a more volatile 2025 than the previous year, where risk assets, particularly fixed income, will continue to offer attractive entry opportunities,” say analysts at Banca March.

Market Reactions

The first two days following these announcements have also provided insight into how markets are digesting the possibility of a new trade war. According to Robeco, the swift execution of Trump’s tariff threats surprised markets, causing volatility in equities, while safe-haven assets like gold and the dollar surged. “After Trump abruptly withdrew his threat of general tariffs on Colombia earlier last week following a migrant deportation deal, the market was convinced that Trump’s bite would be softer than his bark,” says Peter van der Welle, Strategist for Sustainable Multi-Asset Solutions at Robeco.

Van der Welle believes that the latest tariff announcements on Canada and Mexico show that Trump’s bite is primarily tied to his willingness to seal a border security deal and achieve his political goal of restricting migration. “With markets now forced to guess Trump’s next trade policy moves, U.S. trade policy uncertainty has reached its highest level in 40 years, except for the summer of 2019, when the U.S.-China trade war was at its peak. We expect market volatility to remain high in the short term, reflecting a significant risk of another major trade announcement targeting China, Europe, and/or Japan,” he notes.

Key Takeaways for Investors

Michael Medeiros, macroeconomic strategist at Wellington Management, believes that the most important factor for investors to consider in this situation is the increased likelihood of higher inflation volatility, a lower probability of supply-side improvements in the economy, and the significant link between tariff revenues and tax cuts through budget reconciliation. “These tariffs represent Trump delivering on his campaign promises. He is doing what he said he would do, and that is another key factor to keep in mind,” says Medeiros.

Economists at BofA agree that using tariffs as a bargaining tool has increased trade policy uncertainty and expect this trend to continue. “For markets, we see three key takeaways: the U.S. administration is transactional—nothing is final until it’s signed; U.S. economic policy threats should be taken seriously and literally; and the U.S. ‘bailout’ policy may be further from financial relief than the market expects. Investors have suggested that the stock market serves as the U.S. administration’s performance marker and that any policy shift affecting risk assets will be quickly reversed. We advise caution,” they state in their latest report.