The first three months of 2025 marked the worst quarter for the S&P 500 Index since 2022, bringing the benefits of diversification back to the fore. Then came the Trump administration’s “Liberation Day” tariff announcements on April 2, which led to a new round of selling as the announced tariff rates exceeded even the most pessimistic expectations.

Much remains unknown, including the possibility of trade deals being reached. However, with the economy and markets entering uncharted waters, the balance of economic and market risk has shifted unfavorably, in our view.

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