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Investors might want certainty, predictability and stability – but they have been hard-pressed to find them over the past six months. Tom Caddick, Nedbank Private Wealth’s chief investment officer, sat down with Meg Winton to reflect on the factors shaping the markets this year
THE first half of 2025 can be summed up by the “four Ts”: Tariffs, Trump, taxation and tantrums.
That’s according to Nedbank Private Wealth’s chief investment officer Tom Caddick, who has seen first-hand the twists and turns of the past six-or-so months.
It’s safe to say there has been no shortage of significant events that have impacted markets, while keeping us on the edge of our seats.
The reintroduction of US President Donald Trump’s administration was, perhaps unsurprisingly, one of these events, and one which Tom said came with an “anticipated playbook”.
“Tariffs were what Trump was elected on – the MAGA pushback – and part of that was reflected through their implementation,” Tom argued. “But what was expected isn’t necessarily what we saw.”
Trump and his promise of tariffs crash-landed in what felt like a particularly tense moment in geopolitics, but this was nothing new, Tom explained, saying that there was “always an issue globally”.
“The turn of the year was dominated by the events in Ukraine. Since then, to a certain extent, it’s been the Middle East and Israel and Gaza, which had a further spill into Iran,” he said.
“We saw a little bit of market volatility, but nothing too much. The first quarter of the year was, really, relatively benign,” he added.
It wasn’t until Trump’s “Liberation Day” that things ramped up.
“The announcement of far-reaching, fairly draconian tariffs being applied effectively globally on metrics that made little economic sense caused a lot of market turmoil going into the middle part of April and beyond,” he said.
Markets have since been “trying to come to terms with” the administration’s approach to global trade. As Tom said:
“The immediate aftermath of the announcement of tariffs was a significant market sell-off of risk assets. We started to see equities, in particular, trading down because of the unknown impact on global trade.”
Tom explained that this was because, generally, tariffs “beyond a certain level” were seen as bad for inflation and economic growth. The extent of Trump’s tariffs raised questions about a tariff war, resulting in “uncertainty and anxiety” in markets.
Things have changed since then, he pointed out, because the US stance had “softened” after a “significant fall” in the US market.
“Once they were more open to dialogue with trading partners and ways of finding a route through without that same level of extreme impact, we saw markets start to recover,” he explained.
Markets had now “shrugged off” a lot of the potential negative impact of tariffs, Tom said, albeit with “lots of sabre rattling and shouting”.
Certainty, predictability and stability were what investors “liked and wanted” in the markets, so a lack of these factors led to “short term volatility and noise”.
“The pace of change was incredibly unnerving for markets, because it didn’t enable commentators and investors to read through and draw a conclusion before the next change came,” he said.
“There was a period in April this year where you were seeing policy being written on a daily, almost hourly, basis, and that’s policy that can impact short-term markets.”
But, Tom noted, a “key thing” to remember was that much of the change that was discussed did not come to fruition.
He also offered reassurance to those worried about volatility.
“The reality is that you’re receiving a risk premium, or excess return, by investing in areas such as equities,” he explained. “That risk premia require time to even out but can be seen in shorter periods of higher volatility.”
He said that sometimes, professional and retail investors “forget” the “degree of uncertainty that equates to risk”, which is “effectively what justifies the risk premia”, or the better returns.
“The reason that you get better return on equities is largely because there is a degree of unpredictability,” he explained. “Your sweet spot is when you’re getting excess returns and not experiencing the risk.”
We haven’t been able to escape the reality-show-style fallout between Trump and Tesla chief executive Elon Musk. Nor have we missed out on regular updates, pledges and even U-turns in Labour’s first year in government in the UK.
We’ve seen plenty of headline-grabbing events from these moments, but how have they played out in the markets?
Tesla stocks saw significant movement during Musk’s time as an adviser in the White House.
Tom said this could be viewed as the world’s richest man with an “unelected seat at the table” who has a “mandate, voice and platform” to make change and promote ideas that “haven’t necessarily gone through the normal, diplomatic channels”.
“That, coupled with a very strong personality in the White House, meant what we saw was horribly predictable, but not necessarily with all the nuances,” he reflected.
“There was a significant backlash against Tesla itself. Car sales in Europe alone, where they’ve been hit the most, are significantly down on a year-on-year basis.
“The read-through is not just increased EV competition, which is undeniable, but also a response to some fairly right-wing views that are coming through from someone who is seen as a poster child of that company.”
Tom argued that this was a “unique” but “isolated” incident, because although the impacts of Musk’s time in the White House “spilled out” into the markets, it happened because of the actions of an individual rather than a country or company.
This was because, he explained, there were “no other areas” that could be significantly impacted, unless there was a “policy deviation that had a contagion impact on other AI or EV stocks”, for example.
The fallout between Musk and the US President, however, was something Tom and his colleagues saw coming.
“It was utterly predictable,” Tom said, laughing. “We just didn’t know exactly when or how it would play out.”
This situation served as a warning.
“There’s a lesson there for any would-be chief executive turned politician to tread very carefully,” he said.
Speaking of politics, Labour has received its fair share of criticism during its first year in Westminster, particularly when it comes to economic matters.
Tom explained that, in reality, there was “not a lot of room for manoeuvre” when implementing financial and fiscal policy.
“Given the indebted levels of developed countries, your room for manoeuvre is relatively muted,” he said.
“I think anyone looking on would give Labour a relatively low score for their first year in office, largely down to the big difference between the manifesto they were voted in on and the stark reality of what they’re actually able to implement, which has been very challenging.”
How the markets have reacted, Tom noted, was a “different matter”, in that their response was based on the expected implications of policy in areas such as employment, inflation and the knock-on impact on interest rates.
“What we have seen is implications to the gilt market – the UK’s borrowing and the cost of borrowing – where fiscal policy can have a much more profound impact,” he said. “Inflationary figures will have an impact on people’s read-through of the rate of change, which in turn will have an impact on the gilt market, which will then impact the UK’s cost of borrowing.”
Despite this, Tom highlights that 2025 has seen “much stronger markets” in the UK and Europe that have outperformed the US – but he says that should be taken with a grain of salt.
“A lot of that is being put down to the perceived instability of the US currently, and investors looking to divert their investments to what’s seen as slightly more stable and better value, rather than it being based on anything directly going on in the UK,” he explained.
The pace of change was incredibly unnerving for markets, because it didn’t enable commentators and investors to read through and draw a conclusion before the next change came
Tom Caddick
The comparison between the US and UK and European markets continued when Tom outlined areas where he felt there could be opportunities.
He said the UK and Europe had “lagged” behind the US for “a number of years”, driven by the US exceptionalism concept and the fact there was much “easier and greater” access to capital in the US.
“The changes that we’ve seen going on in the US have triggered greater attention to the UK and Europe for investment and could be a good catalyst to release some of the pent-up value that we see in those markets, as opposed to the US,” Tom reflected.
Though the US remained a “very important market”, he said the weaker dollar was making room for emerging markets, such as Latin America, to shine. There, he said, there was “valuation, plus a catalyst for change”.
In terms of asset classes, fixed income was a standout for Tom. He said it could now “do what we wanted it to do for the last decade”.
“Because starting yields are much higher, it can actually add a degree of insurance to your portfolio that you’ve not been able to get when rates were close to zero,” he explained.
“We can get a degree of insurance from the bond markets and fixed income at the same time. It’s a really attractive growth and total return prospect, if we see base rates or interest rates coming down, and I think there’s little debate that they will.”
The “real questions” surrounding fixed income and bonds markets were where they would end up, and how quickly they would get there.
“As a medium-to-long-term investor, fixed income looks good because you can generate an attractive level of income, and if rates continue to fall, you will also attract a potential capital increase.”
On the alternative asset side, Tom shone a light on commercial property and the “interesting valuations” coming out as the cycle turned.
“They have already priced in a lot of negative news, so I think there are pockets of opportunity where income-producing assets start to look really attractive again,” he said.
Reflecting on the twists and turns, pledges and promises, conflict and resolutions, and ups and downs of the last six months, Tom took the opportunity to highlight Nedbank Private Wealth’s core principles and what his priorities were as the chief investment officer.
The investment team, he said, focused on following process, rather than being “reactive”.
And clients come first.
“Our clients are our focal point. Something we put a lot of emphasis on is regular communication and client engagement, access and involvement on the investment side, particularly when you see market volatility,” he said.
“It’s a really important time to be picking up the phone, sending an email, or making yourself available to talk about markets.”
- To find out more about Nedbank Private Wealth and the investment services it offers clients in Jersey, contact the team by calling 01534 887889 or emailing richard.sayers@nedbankprivatewealth.com.
