Investors wary that tariff headwinds will last long after April 2 may want to stick with the stock playbook that’s worked thus far in 2025 — staying diversified, according to one JPMorgan Asset Management strategist. The U.S. stock market has underperformed to start 2025, with all three major averages in the red after the exuberant rally they notched in 2024 and 2023. The S & P 500 is down nearly 4% this year, while the tech-heavy Nasdaq Composite is off by about 9%. But, that doesn’t mean investors haven’t found returns in other parts of the market. International stocks have rallied this year, with the iShares MSCI ACWI ex U.S. ETF (ACWX) up more than 6%. Value stocks are outperforming growth, with the iShares S & P 500 Value ETF (IVE) outpacing the iShares S & P 500 Growth ETF (IVW) by roughly 7 percentage points. Fixed income has acted as a haven for investors; the iShares Core U.S. Aggregate Bond ETF (AGG) has posted a 2% advance this year. ACWX YTD mountain ACWX Staying diversified could continue to help investors as they continue to navigate any ongoing uncertainty around tariffs, which many investors expect is unlikely to be resolved even after Trump divulges his plan for reciprocal tariffs at the Rose Garden at 4 p.m. ET on Wednesday. “Whether you look at other pockets of the equity market for return, you are seeing the benefit of that style diversification, that regional diversification,” Gabriela Santos, chief market strategist for the Americas at J.P. Morgan Asset Management, told CNBC in a phone interview. “So, I think the main message for us on equities is really, really rebalancing away from previous winners — what’s already over-owned, expensive, high expectations — into where maybe there’s risk, but they’re more well priced, understood risks.” “So, that includes, for us, having a balance between growth and value, and removing underweights to international stocks,” Santos added. The strategist is also beefing up the defensive parts of a portfolio, given the lack of clarity around growth and inflation. In addition to bonds, she said that clients are seeking “additional defenders” in alternative assets, such as real estate, hedge funds and infrastructure. “Bonds have shown that they work when it’s more growth risks,” Santos said. “But we do think we need other defenders as well here, given that eventually you could continue seeing this tug of war between growth, inflation, fiscal. So, what a lot of our clients have been thinking about is additional defenders to build in.” Looking abroad, the strategist said that Europe and Japan are two areas of conviction among international stocks. Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange!| Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles, and Dan Ives, with a special edition of Pro Talks with Tom Lee. You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!
