Jonathan Davis of the Money Makers Investment Trusts Podcast interviews Hugh Gimber, executive director and global market strategist at J.P. Morgan Asset Management (JPMorgan). In this wide-ranging interview, Hugh covers the uncertainty facing investors, expectations for the US, European and the UK markets and the choice to hold cash.
Life throughout the first quarter of the 21st century has been nothing if not eventful, in both economic and geopolitical terms. But with President Trump back at the helm of the US government, anticipating even the near future for the global economy and the US economy in particular has become a whole lot more challenging.
As Hugh Gimber, executive director and global market strategist at JPMorgan, points out, that can be demonstrated by the sheer number of newspaper articles covering US trade policy uncertainties, compared with coverage of the previous Trump administration’s trade wars.
Based on those metrics, he explains, “trade uncertainty is as high as it’s ever been – and the higher the level of uncertainty, the greater the inclination for businesses simply to press pause on both hiring and investment.”
That slowing of economic activity in turn feeds into broader investor wariness; at the same time, the trade tariffs now in place are helping to fuel domestic inflation.
However, it’s not simply the imposition of tariffs that is unnerving, but the sheer volatility of policy announcements coming thick and fast.
Investors trying to get a handle on the economic outlook are understandably confused as to whether tariffs are simply being used as negotiation tools or are set to affect supplies and prices on a more permanent basis, Gimber says.
Investors started 2025 with high expectations of a turbo-charged US economy
So far, the other promises on which Trump was elected – of tax cuts and aggressive deregulation, both of which would help to stimulate economic activity – have not materialised in any meaningful way, though they may do so in future.
Thus, as Gimber puts it: “We’re now in a phase where the bulk of potential headwinds to growth are becoming better understood but we have yet to understand where the positive aspects for the US economy could come from.”
The toxic combination of slowing US growth and signs of higher inflation – which makes it so much harder for the US Federal Reserve to take effective action using interest rates – is exacerbated by the fact that most investors started 2025 with high expectations of a turbo-charged US economy, given the new administration’s focus on ‘Making America Great Again’. However, the longer the slowdown continues, the more likelihood there is of layoffs and economic contraction.
Prospects for world markets
What does this uncertainty mean for global equity markets?
As far as the US is concerned, says Gimber: “The current administration is clearly prepared to tolerate more market volatility than anticipated at the start of the year.
Moreover, although many of those in government have made clear that they are not concerned about the level or volatility of the S&P 500, the mid-term elections at the end of 2026 are likely to focus Republican attention in a big way if markets and the economy are still under pressure.
“I believe we will see some concessions over time, but in the short term significant volatility will continue,” Gimber observes.
Rather than trying to second-guess US policy, however, he stresses that the focus for JPMorgan is on “a slightly more defensive allocation, with sectors such as healthcare, utilities and staples having more of a role to play than the tech and cyclical mix that has worked so well over the past two years.”
More broadly, Gimber expects the rest of the world to outperform the US this year, led by Europe and (to a lesser extent) the UK.
Japan and China are more challenging, though for slightly different reasons, he argues. “China’s domestic economy still faces significant headwinds and hasn’t yet seen the policy response needed to sort out the challenges in the real estate market; Japan’s economy is picking up healthily, but that can lead to a stronger yen, which tends to put pressure on the equity market.”
He cautions, however, that “this is not the time to be taking big, active positions in any regional market; we’re talking about spreading regional risk, perhaps with a small bias towards Europe.”
Indeed, the market rotation away from US dominance and the relative success of other regions is fundamental as far as effective risk management through broad diversification is concerned.
Is diversification in equity markets set to work again?
“With so much uncertainty, diversification is your friend,” Gimber stresses. “It has not worked for two years – the best strategy in 2023 and 2024 would have been to hold a small number of very expensive US tech stocks and nothing else – but the good thing now is that regional and sectoral diversification in equity markets are likely to work again.
And that, in turn, means that well-diversified global portfolios will come back into their own as a highly successful long-term investment strategy.
In the face of continuing market volatility caused by economic or geopolitical upset, one common move by worried investors is to retreat to cash.
But although he acknowledges that it’s an understandable response, Gimber stresses that there is no valid rationale for hiding in cash as a means of protecting the value of investors’ wealth, even at current relatively high savings rates.
He points to recent JPMorgan research, which looks at 12 of the major regional wars, banking crises, critical elections and other catastrophic events of the past few decades, comparing equity market returns versus cash returns over one and three years if a lump sum had been invested just before each event.1
The research finds that over one year, a portfolio invested 60% in equities and 40% in bonds beat cash in all but two out of 12 events, and over three years the 60/40 portfolio outperformed every time.
In short, staying invested makes financial sense even at such unpredictable times – but it could be risky to try to position investment trust portfolios solely in anticipation of expected US government policy. It may be far better to trust in a well-diversified global portfolio of robust, high-quality businesses with strong balance sheets that can ride out the inevitable volatility of the coming months and years.
JPMorgan’s stable of investment trusts has several highly regarded and well-resourced European and global portfolios run by experienced managerial teams, including JPMorgan Global Growth & Income, JPMorgan European Growth & Income and JPMorgan Claverhouse Investment Trust.