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Putting the panic into perspective
While current events may feel unprecedented, they echo past crises such as COVID-19, the war in Ukraine, and inflationary shocks – just a few of many historical examples. And despite initial turmoil, markets have historically recovered over time. Investors who maintain a long-term perspective rather than reacting to short-term fluctuations tend to be rewarded.
The key challenge now is understanding the U.S. administration’s broader strategy. While tariffs pose risks - including potential inflation spikes and economic slowdowns - the U.S. government is unlikely to push the economy into a deep recession. This provides a reason for cautious optimism, particularly for the latter half of the year.
European market outlook
Europe is caught between two competing forces: Germany increasing investment and defense spending, while U.S. tariffs create uncertainty. However, we see potential long-term benefits. If European nations respond by strengthening economic cooperation, this shift could support high-quality businesses with sustainable growth prospects, and actually be positive from a European perspective, ultimately.
In response to changing conditions, the Pie investment team is having to be more flexible during these times. For example, investing in defense stocks aligns with Europe’s increased spending. While growth stocks have been out of favour due to recession concerns, an eventual stabilisation could shift capital back toward these strong, resilient businesses.
Looking ahead: market resilience and policy shifts
As political dynamics evolve, markets will remain highly reactive to headlines. Trump’s strategy may involve getting the negative news out early before pivoting to pro-market policies such as deregulation and tax cuts. Negotiations around tariff reductions are also widely expected, which could ease investor concerns.
For investors then, the takeaway is clear: volatility is inevitable, but reacting impulsively can be counterproductive. Instead, maintaining a disciplined, long-term investment approach is often the best strategy.
If you have any questions, please feel free to reach out to the team.
Information is current as at 4 April 2025. Pie Funds Management Limited (“Pie Funds”) is the issuer and manager of the funds in the Pie Funds Management Scheme and the Pie KiwiSaver Scheme (“Schemes”), the product disclosure statements of which can be found at www.piefunds.co.nz. Any advice is given by Pie Funds and is general only. Our advice relates only to the specific financial products mentioned and does not account for personal circumstances or financial goals. Please see a financial adviser for tailored advice. You may have to pay product or other fees, like brokerage, if you act on any advice. As manager of the Schemes, we receive fees determined by your balance and we benefit financially if you invest in our products. We manage this conflict of interest via an internal compliance framework designed to help us meet our duties to you. For information about how we can help you, our duties and complaint process and how disputes can be resolved, or to see our disclosure statement, please visit www.piefunds.co.nz. Please let us know if you would like a hard copy of this disclosure information. Past performance is not a guarantee of future returns. Returns can be negative as well as positive and returns over different periods may vary. The information is given in good faith and has been derived from sources believed to be reliable and accurate. However, neither Pie Funds nor any of its employees or directors gives any warranty of reliability or accuracy and shall not be liable for errors or omissions herein, or any loss or damage sustained by any person relying on such information, whatever the cause of loss or damage. No person, including the directors of Pie Funds, guarantees the repayment of units in the Schemes or any returns of units in the Schemes.