Insights in 5: A Volatile Start to 2025

In his Q1 2025 update, IPC's VP of Portfolio Strategy and CIO Paul Punzo notes that the first quarter of 2025 saw significant market turbulence due to escalating U.S. trade tensions.

A key development was Donald Trump's announcement on April 2nd, introducing “reciprocal” tariffs against many trading partners. Canada avoided new tariffs but faces 25% tariffs related to alleged drug trafficking and illegal migration. Exemptions for goods covered by NAFTA remain in place, but these announcements indicate major changes in global trade norms, impacting supply chains, costs, and investment strategies. Strategic agility, diversified portfolios, and close monitoring of trade developments will be essential.

Investor anxiety has increased due to potential economic recession and uncertain U.S. trade policies. Comprehensive diversification across global markets and currencies is key to navigating this period. Maintaining exposure to U.S. equities is important for access to sectors like technology and healthcare. The economy and markets are distinct, and how companies respond to tariffs will be crucial for investment decisions going forward.

The portfolio managers at IPC Private Wealth reviewed portfolio positioning Q1, choosing to maintain a neutral allocation between stocks and fixed income. For fixed income, the focus remains on short-term Canadian Corporate Bonds. For equities, the focus remains on U.S. stocks, while reducing Canadian and international exposure. Specific adjustments include removing U.S. and International Value Components and adding a Liquid Alternative component for diversification.

In conclusion, Paul recommends that during this time of uncertainty, investors maintain a long-term investment perspective and adhere to your financial plan. If your financial situation has changed or you have concerns about how your portfolio is currently positioned, please contact your advisor.

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