Beyond the surge in global market volatility, Trump’s new trade policies may represent a catalyst for global investors reconsidering their strategic asset allocation. The imposition of tariffs, aimed at revitalising US domestic manufacturing and reducing the trade deficit, has triggered retaliatory measures from China, escalating the spectre of a trade war between the two largest world economies. Although the worst-case scenario seems to have been avoided, these tensions risk impacting negatively US corporate earnings and erode investor confidence, prompting a comprehensive reallocation of global capital away from US markets.
Non-US investors, corporates and individuals will also reconsider their holdings of US assets and allocation of capital to the US because of section 899 of the One Big Beautiful Bill Act that the US Senate is considering after already having been passed by the House of Representatives. The new provision would impose increased retaliatory US federal income and withholding taxes on the income of foreign persons in jurisdictions that have adopted “unfair foreign taxes” according to the US administration. The increased tax rates would also apply to their holdings of US assets, including government and corporate bonds and equities.
Switzerland’s safe haven assets should come back in focus
When looking to reallocate capital away from the US, in our view Switzerland provides an attractive alternative as investors favour countries with strong institutions, a solid legal framework and a structurally resilient economy. Switzerland performs exceptionally well across all these structural success factors, which helps the country maintain its appeal as a unique investment destination.
Amid all the debate in the US about policies that could devalue the dollar in order to revive its manufacturing base, Switzerland is a prime example that defies that logic. The strength of the Swiss franc has not compromised its global competitiveness. In fact, Switzerland combines one of the world’s strongest currencies with a robust manufacturing sector. This is reinforced by its top ranking in the latest IMD World Competitiveness Report in June 2025, where it was recognised as the most competitive country globally – demonstrating both its stability and dynamism. Switzerland’s safe-haven status reflects its unparalleled political and economic resilience, as illustrated by low unemployment rates, a flexible job market, a pro-business environment with low tax rates and little government intervention.
In addition, as a high-wage, high-cost economy without natural resources, continued innovation is key to Switzerland’s economic model. This is particularly evident in Switzerland’s position as one of the top spenders worldwide on Research & Development and being Number 1 innovation leader globally for 14 consecutive years. In today’s global knowledge economy – in which competitive advantage is created by intellectual capital and patents rather than tangible resources underground – having one of the most skilled labour forces underpins Switzerland’s leadership across key industries, including finance, medical technology, pharmaceutical and precision manufacturing.
As a result, the equities of Swiss companies operating in this supportive business environment offer a compelling case for global portfolio diversification. Swiss equities provide access to high-quality and highly innovative companies. The innovative nature of many Swiss companies is a hidden performance driver that drives sustained pricing power and value creation as measured by the forward return on equity compared to European peers.