Navigating uncertainty with a steady hand
The past few months have been a challenging period for global markets, with heightened volatility and shifting investor sentiment. Much of this turbulence has been driven by geopolitical developments—most notably, the imposition of tariffs by U.S. President Donald Trump in early April.
While the rationale behind these tariffs is widely understood, their implementation initially rattled markets, particularly U.S. equities, which saw sharp declines. However, as the situation evolved and some of the more aggressive tariff measures were scaled back, markets responded positively. This rebound is clearly reflected in the year-to-date (YTD) performance figures, which show a notable recovery from the lows earlier in the year.
To view the latest performance of our solution funds, please refer to our updated fact sheets available on our new funds page. Please note that past performance is not a reliable indicator of future results.
Performance in perspective
Despite the ups and downs, all investment profiles have delivered returns of just over 5% over the past 12 months. Given the backdrop of political uncertainty and market volatility, this is a solid outcome. It's worth noting that much of relative performance (i.e. compared to market indices) has been influenced by legacy positioning—e.g. investment skews from the summer of 2024 which are no longer part of the funds—which explains the difference between the 6-month and 1-year relative return figures.
So far this year, returns are hovering around flat—within a narrow range of +/- 1%. While this may seem modest, it’s a reasonable result considering the macroeconomic headwinds we've faced.
Adjusting to uncertainty
At the start of the year, our funds were positioned to take advantage of positive market momentum. However, as uncertainty increased, we took proactive steps to reduce risk across our strategies.
One of the key adjustments was lowering the duration of our bond holdings—a move we implemented in mid-2024. This approach has been particularly beneficial for our more cautious fund profiles, helping to shield them from larger swings in the bond market.
In simple terms, "lower duration" means we’ve focused on bonds that are less sensitive to interest rate changes. This has helped us manage risk more effectively during periods of market stress.
Looking ahead
While political developments—especially those involving trade policy—can create short-term noise, markets are increasingly looking beyond these headlines. The broader global economy remains in relatively good health, and corporate earnings continue to grow. This provides a supportive backdrop for both equity and bond markets.
That said, there is still a “tail risk” to consider: the possibility that more disruptive elements of the Trump-era trade agenda could resurface. For now, markets are not pricing in a prolonged trade conflict, but it remains a scenario we are monitoring closely.
Another potential tailwind for markets is the prospect of lower interest rates. Central banks around the world are signalling a willingness to cut rates if needed, which would provide additional support for investment returns.
In summary
While recent months have tested investor confidence, our funds have remained resilient. We’ve taken measured steps to adapt to changing conditions, and we remain focused on long-term opportunities. As always, we continue to monitor developments closely and adjust our strategies to help protect and grow your wealth.
Important information
This article is for information purposes only. It is not intended as investment advice.
Fees and charges may apply.
The value of investments and the income from them can fall as well as rise and are not guaranteed. The investor might not get back their initial investment.
In preparing this article we have used third party sources which we believe to be true and accurate as at the date of writing but can give no assurances or warranty regarding the accuracy, currency or applicability of any of the contents in relation to specific situations and particular circumstances.
Lloyds Wealth (ACD) is a trading name of Lloyds Wealth Management (ACD) Limited. Registered Office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales No. 11722973. Authorised and regulated by the Financial Conduct Authority number 834833.
