Our Themes of Fragility, Durability and The Age of Alpha encapsulated our allocation shifts coming into 2025, predicated on concerns over full valuations, index concentration in U.S. equities and the risk of reigniting inflation.
Then reality struck. A wave of executive orders, Liberation Day and sweeping fiscal legislation aimed at reshaping the post–World War II economic order created a period of change. Volatility spiked in April as investors tried to digest shifting policies on what often felt like comically fast-moving “facts.” As cooler heads prevailed, both in Washington and in the markets, volatility subsided and markets rebounded. For now, investors appear to have grown comfortable with being uncomfortable.
Still, we remain in the early stages of potential significant and lasting shifts in economic policy. In moments like these, we rely on first order principles that guide our thinking and support our actions.
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