Despite President Donald Trump’s assertion that his newly implemented tariff strategy will stimulate market growth, U.S. equity markets have suffered significantly, marking their worst performance since March 2020. This downturn is causing ultra-wealthy investors to seek safer investment opportunities internationally.
Currently, the average tariff rate has surpassed levels seen in the 1930s, which creates uncertainty about its potential economic impact, according to Larry Adam, Chief Investment Officer at Raymond James. The U.S. market has been declining, and analysts, including those at JPMorgan, are warning about the increased risk of a recession this year. The traditionally dominant status of the U.S. economy is now being scrutinized.
In response, investors are adjusting their strategies. Concerns about the impact of tariffs and other administrative actions by the Trump administration, such as reduced funding for research, are prompting ultra-high-net-worth investors and family offices to reconsider their positions in the U.S., at least temporarily.
Jon Ulin, a private wealth advisor at Ulin & Co. Wealth Management, notes that there is a growing interest from high-net-worth family office clients in diversifying their portfolios internationally. This is mainly driven by policy uncertainty and the potential for economic or market disruptions.
Many of these affluent investors already hold substantial investments and real estate internationally, particularly those with foreign ties or dual citizenship. However, current uncertainties are motivating them to explore better growth opportunities and hedges abroad.
For these investors, international investments offer more than diversification; they provide currency hedges and access to bonds and equities not available in U.S. markets, according to Ulin.
Goldman Sachs representatives stated at a media event that they are closely monitoring Trump’s policies. Although many of their ultra-high-net-worth clients are seeking guidance, they have not yet abandoned U.S. equities. However, non-U.S. equities have performed better this year, and broader diversification remains a strategic aim for the firm. Goldman Sachs maintains a long-term positive outlook for the U.S., citing the country’s innovative capabilities.
Elizabeth Burton, a senior client investment strategist at Goldman Sachs, mentioned that there is still optimism that the U.S. might flourish compared to other countries even amidst tariff challenges. Yet, many wealthy clients were considering moving assets out of the U.S. before Trump’s recent initiatives. Europe, due to its increased defense spending, and India are seen as attractive regions.
Matt Gibson, Global Head of the Client Solutions Group at Goldman Sachs, remarked that clients began questioning traditional investment strategies in U.S. markets during the last quarter of 2024, especially following election events.
Tariff uncertainties are heightening these discussions. According to Marc Nachmann, Global Head of Asset & Wealth Management at Goldman Sachs, the past three months have brought significant changes. Client conversations now are focused on how tariffs should influence asset allocation strategies.
This report was initially featured on Fortune.com.
