Trump’s return will transform US domestic policy and reverberate through the international system by up-ending trade, investment, and geopolitical risk patterns. These changes will affect private capital investors, including those operating in small-state international finance centres (IFCs), who must gauge their response.

They also provide the headline for five significant trends — Trump, Tariffs, Tax, Tech, and Trade – poised to take their place at the centre of the global investment stage through 2025 and beyond.

Trump: ‘America First’ And The Reconfiguring of Global Risk

The return of Donald Trump to the Presidency will herald a transformative pivot to a shifted global environment, now more nationalistic and protectionist. Trump’s “America First” agenda – built upon the principles of rewriting trade deals, breaking away from international accords and placing U.S. interests ahead of multilateralism – will bring geopolitical risks and opportunities back to the forefront of the 2025 agenda.

Trump’s presidency will make for a choppier investment environment for private capital investors. In his first term, we witnessed a transactional model of global relations manifested in trade wars, diplomatic tensions and bouts of financial volatility. If, in 2025, his policies are still focused on limiting foreign competition and combating global interdependence, investors should remain on guard for ripple effects.

On the upside, this political shift might be a boon for small-state IFCs. Countries with favourable tax policies, regulatory flexibility, and a track record of attracting capital in times of political instability will become ever more attractive to investors seeking safe harbours or alternative pathways into markets that are heavily impacted by shifts in U.S. policy.

Tariffs: We Are Still In The Age of Protectionism And Supply Chain Shocks

One of Trump’s most consequential legacies from his first term was his aggressive push to raise tariffs, including in his trade war with China. When he returns to office in 2025, tariffs will likely remain a significant tool of U.S. foreign policy. The immediate fallout will wash through international commerce, spanning matters as diverse as EVs, cell phones and agriculture, as Trump pursues more protectionist policies while limiting American reliance on foreign suppliers.

These developments will be a double-edged sword for small-state IFCs. Tariffs can disrupt global supply chains, rendering certain regions or industries less competitive and reorienting trade patterns. They can also boost inflation and prices in the short term, negatively impacting the cost of living. Still, investors could see new opportunities in jurisdictions playing a role as alternative manufacturing hubs or trade gateways. If manufacturing relocates, the investment that supports it will flow to the U.S., potentially via IFC conduits. Southeast Asian or African countries might also benefit as American companies seek to lessen their exposure to steep Chinese tariffs.

However, the spillover effects of tariffs – especially if they’re directed at a vital sector, like technology – could include market turbulence and price hikes. Private capital investors must brace for supply chain disruptions in sectors reliant on Chinese or other global suppliers and diversify their portfolios to minimise the fallout. Companies examining ways to move production away from tariff-heavy markets for their cost-effectiveness and efficiency will be in demand. At the same time, small-state IFCs with strong capital management and deployment capabilities can play a key role in meeting the growing demand for new investment capital flows as production shifts to new locations.

Tax: The New Global Tax Order And Its Impact On Investment Flows

Seismic change is underway on the global tax front, and Trump’s return will almost certainly challenge this process. Although the OECD’s promotion of a global minimum tax rate of 15% has been a strong theme over the last several years, Trump’s administration will likely re-examine the subject, particularly as he strives to keep U.S. businesses competitive internationally through a two-tier corporation tax system. Domestic ‘Made in America’ firms could benefit from a 15% CIT whilst foreign players may still have to bear the current 21% rate.

For small-state IFCs, Trump’s return may elevate interest in jurisdictions that offer favourable tax regimes for multinational corporations, low or no tax rates on capital gains, and/or more benign tax-neutral regimes. Small-state IFCs are well placed to offer both a capital-friendly tax environment and a robust and rich financial infrastructure to attract and channel capital flows from investors.

But Trump’s approach also risks forcing the U.S. into renegotiating tax treaties and pursuing more aggressive tax policies domestically. The great unknown is how markets will react to a perpetuation of the Tax Cuts and Jobs Act and a raft of new tax-cutting measures, adding to the steep tax cuts from the first Trump administration due to run out in 2025.

Much of the cuts, at least initially, will be funded by increased borrowing. Will the bond markets be prepared to bankroll the additional borrowing needed, given that the U.S. debt servicing is already set to exceed 6% of GDP? Interest payments will exceed military spending for the first time in U.S. history, and this will surely be a test for the mighty dollar.

Tech-tonics: Jump-starting Investment In Technology Will Raise Geopolitical Friction

With technology increasingly shaping the global economy, a China vs U.S. tech standoff will almost surely speed up the trend toward a technological decoupling of the two major global economies, one that will probably be most pronounced for China. The technological ‘Cold War’ that started during Trump’s first term — focused on AI, 5G and semiconductors — will continue through 2025, altering the flow of global investment and the nature of innovation ecosystems.

The changes could create a unique opportunity for private investors to ride the tech-driven growth wave, especially in the future mega-sectors such as artificial intelligence, quantum computing, biotech and its supporting infrastructure. The geopolitical and market risks of tech investments will also increase. Corporate adoption still lags personal consumption (75% of all ChatGPT subscribers are personal) and investment to date of $1.5trn shows lots of promise but little by way of tangible near-term profits. AI remains an exciting but nascent and rapidly evolving technology that still has, for many, to prove its real-world impact.

Among the things to keep an eye on will be the rise of tech startups and venture capital in smaller-state IFCs. A proactive approach by jurisdictions such as Singapore and the Cayman Islands has made them attractive destinations for fintech, blockchain and other technologies. These smaller centres could strengthen their positions as key players in the global tech investment firmament amid geopolitical tensions.

Trade: Increasingly Regional, National And Protectionist

Global trade winds will blow differently in 2025, beset as they are by fractured trading blocs and regional alignments. Bilateral trade deals – instead of multilateral agreements – may take precedence, increasing export tensions between the West and other powers, including China and Russia. In this environment, the future of the WTO is not assured.

Disruption may open new avenues for small-state IFCs to play an intermediation role in leveraging regional trade agreements. Traditional financial systems might find it challenging to meet the needs of the new economy. The rise of digital trading hubs in smaller IFCs will be a boon for investors as these hubs are gaining traction in regions such as southeast ASIA, Africa and the Middle East, where emerging markets are making inroads into conventional trade routes.

2025 will also see further evolution in trade finance. The shift towards digitised trade and persistent political friction will drive demand for more secure, transparent trade finance solutions, which small-state IFCs are well-placed to offer. The remainder of this decade will be critical for the embedding and establishment of all things crypto, with the tailwinds of a supportive U.S. president and a more benign regulatory environment. Understanding how these new trade routes and financial instruments will develop will be a key to accessing growth areas in an increasingly fragmented global marketplace for private capital investors.

Wrap-Up: The Times They Are A-Changin’

2025 will be a year of significant change in global events, trade and investment. The re-entry of Donald Trump into the White House will bring back his brand of nationalism, protectionism and a more transactional approach to foreign relations, all of which will have significant implications for the shape of investment markets. Private capital investors, including those operating through small-state IFCs, will have to alter their strategies in a world redefined by geopolitical risk, technological disruption, and new tax and trade paradigms.

Small-state IFCs offer a unique blend of regulatory flexibility, tax advantages, relative political stability, and investment potential. These make them an attractive option for investors looking for alternatives to larger, more volatile markets. Still, private capital investors will need to know how to prosper in an altered world of Trump, Tariffs, Tax, ‘Tech-tonics’ and Trade.

Adaptability, foresight and strategic diversification will be the keys to success in 2025.

By Geoff Cook, chair of Mourant Consulting

SEI will support Attivo Investments’ in-house team in developing a sophisticated investment approach for advisers to help investors meet their financial goals, as well as providing business support to help power Attivo Investments’ growth.

Assets in discretionary managed portfolio services (MPS) in the UK have grown 36% in the 12 months prior to September 2024. A Co-CIO structure supports an MPS proposition by helping ensure an investor’s priorities drive every decision by blending strategic vision with operational execution—powered by technology and aligned with evolving regulations.

Portfolio models available for Attivo’s clients include:

Low Cost: Six strategies designed with a light goals-based framework focused on preservation and accumulation. These portfolios leverage passive investment building blocks to replicate market performance as it rises and falls. Constructed within a fund-of-funds structure, they provide a simple, transparent, and cost-effective solution for achieving long-term investment objectives.

Core: Seven strategies designed with a heavily goals-based framework focused on preservation, accumulation, and withdrawal. Utilizing a manager-of-managers approach, these portfolios focus on reducing trade frequency and capital gains tax realization, enabling greater efficiency. This strategy blends cost efficiency with access to elite investment expertise.

APEX: Six unconstrained strategies designed for high-net-worth and experienced investors and focused on preservation and accumulation. This strategy includes additional asset classes, such as private equity or hedge funds, providing more flexibility and higher potential returns.
Commenting on the strategic partnership, Charlotte Watson, Chief Investment Officer at Attivo Investments, said:

“Our collaboration with SEI—a backbone of the global financial services industry—is a testament to our commitment to delivering exceptional value to financial planners and their clients. In addition to their asset management capabilities, SEI’s proposition leverages their expertise to help drive our growth.

“SEI’s investment philosophy and operational framework aligns seamlessly with our culture of innovation and focus on client outcomes, ensuring that we are delivering impactful solutions from day one. We strongly believe this strategic partnership will enable Attivo to rapidly launch and scale an institutional-quality investment management business focused on what matters most to our clients.”

Ian Love, head of asset management for EMEA at SEI, added: “In today’s economic environment, personalization and access are no longer the exception to meeting investors’ financial goals—they’re requirements. Our strategic partnership with Attivo Investments is rooted in a vision of innovation, investment excellence, and a focus on client centricity.

“Our Co-CIO approach empowers Attivo Investments to deliver personalized portfolios at scale, meeting the diverse needs of their financial planners’ clients. We’re thrilled to help drive positive client outcomes, support Attivo’s mission and power their growth.”

The investment decisions for the Flexible Allocation strategy will not be anchored by a traditional benchmark. Instead it has an ‘outcome-focused’ approach by targeting cash plus 4% on an annual basis. Returns aim to outpace inflation, protecting and increasing the real value of investments, aimed at offering a stable investment journey for clients.

This dynamic asset allocation approach explicitly considers how conditions vary significantly across the market cycle. It aims to exploit market inefficiencies and manage downside risk, without being handcuffed by the parameters of a traditional benchmark. The strategy focuses on the retail or wholesale investor with a mid-range risk appetite and has a standard five-year investment horizon for returns.

It is the fourth strategy in the multi-asset range, which was reorganized earlier in 2024 as Sustainable Income Allocation, Sustainable Diversified Allocation and Sustainable Dynamic Allocation. Differentiating from the other three, Flexible Allocation has free reign to pick securities across the entire spectrum of assets managed by other Robeco equity and fixed income teams.

This means it will not necessarily follow the usual ‘60-40’ multi-asset mix of populating the portfolio with 60% equities and 40% bonds mirrored by standard benchmarks. Flexible Allocation is designed to offer far more active and dynamic views in terms of the asset mix.

The asset allocation will be based on Robeco’s five-year outlook ‘Expected Returns’, which offers in-depth research on asset class projections for the next five years. It will be a key input for the ideal mix and weightings with a risk range of 6-12% volatility for the strategy.

According to the outlook, it is expected that inflation is going to run higher than the central banks’ virtually universal Consumer Price Index (CPI) target of 2% for the next four or five years, with a base case of 2.5% in euros that could at least cover inflation via the plus 4% target.

Colin Graham, head of multi asset strategies at Robeco: “Many investment strategies are focused on a benchmark. At Robeco we believe our clients don’t start their investment journey with a benchmark, but with an investment goal. Therefore, the central focus of this is achieving an annual return of cash plus 4% return at a medium risk level. However, we’re turning this around by using some of the best underlying security selection from across Robeco, whether that’s from the equity side or credit selection.”

The asset class pulled in a net €29.7bn in the month, while Money Market USD  was the best-selling Lipper Classification after receiving €11.2bn inflows.

Providers of mutual funds pulled in €22.5bn, while passives saw net inflows of €21bn.

Detlef Glow, head of Lipper EMEA research at LSEG, said: “Within the current market environment, it is not surprising that European investors bought further into money market products since the Eurozone and other major economies have an inverted yield curve. This means that money market products offer a higher yield than medium- or long-term bonds.

“More generally, long-term funds and money market products enjoyed inflows for the month. These flow numbers might indicate that European investors are further readjusting their portfolios to the current market environment.”

See also: Evelyn Partners adds to US equities and UK gilts in Core MPS rebalancing

Equity funds attracted €2.5bn net inflows in January, while multi-asset funds suffered outflows of €11.7bn. Investors also pulled €3.6bn from alternatives and €1.8bn from real estate funds.

By fund group, BlackRock’s €7.3bn net inflow was the best-selling among fund promoters in Europe, ahead of HSBC’s €6.7bn.

JP Morgan (€6.5bn), Axa Investment Managers (€4.3bn), and BNP Paribas (€4.0bn) all also saw strong net inflows.

The inflows occurred against the backdrop of an unstable market environment due to the geopolitical tensions in Middle East, especially the Red Sea, which increased in January due to concerns over prolonged delivery times caused by shipping companies having to avoid the Suez channel.

Glow added: “This month was somewhat business as usual. However, it is still surprising that European investors prefer bond funds over money market products, given the inverted yield curves in the major economies around the globe.

“In addition, it is noteworthy that one of the major trends from 2023 (actively managed US equity funds faced outflows, while ETFs enjoyed inflows) continued in January 2024.”

This article was written for our sister title Portfolio Adviser

New positions have been taken in the Premier Miton US Opportunities fund and two exchange-traded funds (ETFs), the iShares Up to Years Index-Linked Gilt Index and iShares Up To 10 Years Gilts Index.

“There is a huge amount of market noise at the moment around the AI boom, and the surging ‘Magnificent Seven’ stocks that are driving US, and even global indices higher,” said James Burns, lead manager of the Evelyn Partners Core MPS.

“With positions already benefiting from this trend, we believe there is value in seeking exposure to other areas of the US stockmarket where gains could broaden out from big tech,” he added.

See also: Pacific, Albemarle and Hymans Robertson model portfolios added to Parmenion platform

The increase in exposure to the US was done at the expense of UK equities, and to a lesser degree, Europe, which were both trimmed back.

In terms of fixed income, Burns said that since October 2022 the MPS had steadily been increasing its weighting to government bonds across the risk spectrums and this move continued in the latest rebalancing.

“We see short-to-medium dated gilts as the area of the bond market that offers the best value at the moment, so within fixed income we’re seeking more exposure there,” he said.

To fund this move, the Core MPS trimmed back its allocation to US government conventional and index-linked bonds, although Burns added they remain “dominant” positions within that segment of the portfolios.

Corporate bond positions were also reduced, as Burns said credit spreads have continued to tighten to levels which meant their protection characteristics have “become less obvious”.

“Where we retain exposure, it is significantly skewed to short-dated bonds that should fare relatively well in the event of any downturn,” he said.