Institutional Asset Manager Newsletter 28.03.25

Fanning the flames of a potential trade war

President Donald Trump has continued to fan the flames of a potential global trade war by announcing new import taxes of 25 per cent on cars and car parts coming into the US.
The tariffs will come into effect on 2 April and are already causing major upsets across the auto industry. On Wednesday, shares in General Motors dropped around 3 per cent, while the owner of Jeep and Chrysler, Stellantis, fell 3.6 per cent. And even Trump’s best friend Elon Musk has not escaped, with Tesla shares down more than 5 per cent on Thursday.
But where there are losers there are winners and this week we bring you news that emerging markets and Asian hedge funds are leading industry wide gains this year profiting from the uncertainty created by tariff and trade uncertainty.
Notably the HFRI Emerging Markets: China Index surged 6.0 per cent in the year to end of February, while the HFRI EM: Asia ex-Japan Index gained 2.8 per cent over the first two months of the year.
Kenneth Heinz, President of HFR, says it is not just trade tariffs driving the markets, noting that managers are also positioning for the impacts of policy shifts in immigration, energy, and US government budget reduction efforts, "which are driven by and are designed to dramatically influence current trade deficits".
He predicts that as uncertainties evolve throughout the year, it is likely that leading global institutions and investors will increase allocations to "innovative, sophisticated EM and cryptocurrency hedge funds for specialised access to these powerful trends".
Sticking with Trump and his impact on asset management, we bring you an interview with Nordea Asset Management’s David Crawford who expresses his disappointment at the growing list of big-name firms exiting the Net Zero Asset Manager initiative.
BlackRock, Vanguard and Northern Trust have all withdrawn from NZAM as anti-ESG sentiment gains momentum in the US spurred on by the administration’s pro-fossil fuel agenda not only domestically but globally.
Trump is currently brokering deals with Japan and Ukraine, and using US leverage in tariffs and military aid to strengthen the flow of oil and gas around the world.
However, Crawford says investor appetite for ESG strategies remains strong, a view supported by research from consultancy XPS Group which finds that three quarters of UK pension schemes have adopted net zero targets, while 69 per cent have made asset allocation changes to address climate risks.
As Crawford notes, investors recognise that the transition to Net Zero is still very much in place and that there are plenty of opportunities to make returns while supporting positive action on climate.

Gill Wadsworth, Editor, Institutional Asset Manager
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