On the back of heightened tariff activity in July, US trade policy developments during the month featured both escalations, temporary pauses as well as announcements that affected specific industries. The most significant move was an extension of the US-China truce by 90 days, delaying potential tariff hikes until November while trade talks continue. In parallel, an unprecedented deal was struck with semiconductor companies, Nvidia and AMD, which agreed to share 15% of revenues from Chinese sales in exchange for export licences. The US government also acquired a 10% stake in Intel, marking a rare direct intervention in a private firm. Relations with India, however, worsened as the US doubled tariffs to 50%, citing the continued purchases of Russian oil as the catalyst. Tariffs also created turbulence in commodity markets. The US briefly moved to apply duties on imported gold bars, unsettling Switzerland’s refining industry and global bullion trade, before Trump reversed course and confirmed gold would remain tariff-free. At the same time, tariffs on scrap aluminium raised fears of plant closures. Meanwhile, a proposed 100% tariff on semiconductor imports was coupled with exemptions for companies such as Apple that pledged new US investments. As the month drew to a close, the EU faced US threats of retaliation over digital regulations affecting American technology companies whilst a US appeals court ruled that many of Trump’s tariffs were illegal. However, they are allowed to remain in force pending a Supreme Court review, underscoring ongoing legal and policy uncertainty in global trade.
In August, the policy spotlight was on central banks as inflation pressures collided with slowing growth, complicating rate decisions in the US and UK. In the US, headline consumer inflation was stable, but tariff-related cost pressures began surfacing in corporate guidance. Consumer goods company Procter & Gamble said it would raise household product prices by 5% in 2025, and US retailer Walmart flagged margin pressure from higher import costs—both pointing to an impending inflationary impact to consumers from the announced tariff increases. The more immediate concern, however, was labour-market softness: July employment data was weaker than expected and data released for the previous two months saw the largest non-pandemic downward revision on record. The episode sparked political controversy, including the dismissal of the Bureau of Labor Statistics commissioner, raising concerns about data and institutional independence. Separately, actions aimed at the Federal Reserve (Fed)—including an attempted dismissal of a governor and a temporary nomination to the Board—highlighted tensions over monetary policy autonomy. Against this backdrop, the Fed held rates at 4.25%–4.50% in August, with Chair Jay Powell acknowledging visible tariff effects on prices but signalling openness to a September cut given labour-market risks. Markets now expect a 0.25% cut at the next meeting, even as core inflation measures (which strip out the more volatile categories of food and inflation) stayed firm, underscoring a delicate trade-off faced by the Fed to target both high inflation and a deteriorating employment backdrop.
In the UK, inflation accelerated to 3.8%—the highest since January 2024—while employment trends softened. The Bank of England delivered a third 0.25% cut of the year to 4.0% via a rare second-round, 5–4 vote, reflecting deep divisions on the Monetary Policy Committee. Elsewhere in Europe, France’s prime minister called a confidence vote tied to deficit-reduction plans, adding upcoming political risk to the uncertain global trade backdrop.
For now, investors drew comfort from the developments above and largely looked through these risks: equities hit new highs on solid earnings and expected Fed easing.
In August, the IFSL Wise Multi-Asset Income Fund fell 0.4%, slightly behind the IA Mixed Investment 40-85% Sector, which rose 0.3%. During the month, our renewables holdings underperformed as falling medium-term power price forecasts and rising UK government bond yields drove weaker Net Asset Values (NAVs) and wider discounts. The Renewables Infrastructure Group’s June NAV fell 4% over the quarter, mainly from reduced demand growth assumptions and wind generation 10% below budget, leaving cover tighter for its reaffirmed dividend. Future sentiment hinges on asset disposals and recycling into its 1GW pipeline of development assets. Bluefield Solar’s NAV also fell, despite strong solar output, on weaker price forecasts for power. Core names like HICL Infrastructure proved steadier, with disposals validating NAVs and future dividend payments confirmed. Our property holdings also came under pressure reflecting a more downbeat assessment from investors towards domestic UK-focussed assets given subdued economic growth, inflationary pressures and a government that looks set to increase taxes to cover wider fiscal deficits. Empiric Student Property fell despite the agreed takeover from Unite whilst Helical was weak on no specific news. Workspace was flat over the month despite providing an encouraging update on lettings and the news that Saba, an activist shareholder, has built a 5% stake in the company. Paragon Banking Group also fell as expectations grew the upcoming budget might include a specific banking tax to help plug the gap in government finances. By contrast, our international equity holdings, such as Schroder Global Equity Income, Aberdeen Asian Income and Schroder Emerging Market Value performed positively helped by the relatively calm trade developments over the month, notably between the US and China. This also positively impacted both of our commodity focussed investment trusts. Finally, International Biotechnology Trust continued to recover from its April lows as a result of increased levels of mergers and acquisitions and a more conciliatory tone towards the sector emanating from the White House.
Over the month, we deployed some of the cash that has recently been built up by increasing our holdings in areas that have seen recent weakness. Notably, we increased our exposure to infrastructure, particularly renewables, where discounts have widened against NAV that have been rebased lower. Dividend yields of over 9% and discounts to NAV of over 25% look to be pricing in considerable negativity around future power prices and appear attractive relative to the return available from longer dated government bond yields. At the same time, we topped up our holdings in HICL Infrastructure and International Public Partnerships. We also added to CT Private Equity, Odyssean Investment Trust and Workspace.
On the back of heightened tariff activity in July, US trade policy developments during the month featured both escalations, temporary pauses as well as announcements that affected specific industries. The most significant move was an extension of the US-China truce by 90 days, delaying potential tariff hikes until November while trade talks continue. In parallel, an unprecedented deal was struck with semiconductor companies, Nvidia and AMD, which agreed to share 15% of revenues from Chinese sales in exchange for export licences. The US government also acquired a 10% stake in Intel, marking a rare direct intervention in a private firm. Relations with India, however, worsened as the US doubled tariffs to 50%, citing the continued purchases of Russian oil as the catalyst. Tariffs also created turbulence in commodity markets. The US briefly moved to apply duties on imported gold bars, unsettling Switzerland’s refining industry and global bullion trade, before Trump reversed course and confirmed gold would remain tariff-free. At the same time, tariffs on scrap aluminium raised fears of plant closures. Meanwhile, a proposed 100% tariff on semiconductor imports was coupled with exemptions for companies such as Apple that pledged new US investments. As the month drew to a close, the EU faced US threats of retaliation over digital regulations affecting American technology companies whilst a US appeals court ruled that many of Trump’s tariffs were illegal. However, they are allowed to remain in force pending a Supreme Court review, underscoring ongoing legal and policy uncertainty in global trade.
In August, the policy spotlight was on central banks as inflation pressures collided with slowing growth, complicating rate decisions in the US and UK. In the US, headline consumer inflation was stable, but tariff-related cost pressures began surfacing in corporate guidance. Consumer goods company Procter & Gamble said it would raise household product prices by 5% in 2025, and US retailer Walmart flagged margin pressure from higher import costs—both pointing to an impending inflationary impact to consumers from the announced tariff increases. The more immediate concern, however, was labour-market softness: July employment data was weaker than expected and data released for the previous two months saw the largest non-pandemic downward revision on record. The episode sparked political controversy, including the dismissal of the Bureau of Labor Statistics commissioner, raising concerns about data and institutional independence. Separately, actions aimed at the Federal Reserve (Fed)—including an attempted dismissal of a governor and a temporary nomination to the Board—highlighted tensions over monetary policy autonomy. Against this backdrop, the Fed held rates at 4.25%–4.50% in August, with Chair Jay Powell acknowledging visible tariff effects on prices but signalling openness to a September cut given labour-market risks. Markets now expect a 0.25% cut at the next meeting, even as core inflation measures (which strip out the more volatile categories of food and inflation) stayed firm, underscoring a delicate trade-off faced by the Fed to target both high inflation and a deteriorating employment backdrop.
In the UK, inflation accelerated to 3.8%—the highest since January 2024—while employment trends softened. The Bank of England delivered a third 0.25% cut of the year to 4.0% via a rare second-round, 5–4 vote, reflecting deep divisions on the Monetary Policy Committee. Elsewhere in Europe, France’s prime minister called a confidence vote tied to deficit-reduction plans, adding upcoming political risk to the uncertain global trade backdrop.
For now, investors drew comfort from the developments above and largely looked through these risks: equities hit new highs on solid earnings and expected Fed easing.
In August, the IFSL Wise Multi-Asset Income Fund fell 0.4%, slightly behind the IA Mixed Investment 40-85% Sector, which rose 0.3%. During the month, our renewables holdings underperformed as falling medium-term power price forecasts and rising UK government bond yields drove weaker Net Asset Values (NAVs) and wider discounts. The Renewables Infrastructure Group’s June NAV fell 4% over the quarter, mainly from reduced demand growth assumptions and wind generation 10% below budget, leaving cover tighter for its reaffirmed dividend. Future sentiment hinges on asset disposals and recycling into its 1GW pipeline of development assets. Bluefield Solar’s NAV also fell, despite strong solar output, on weaker price forecasts for power. Core names like HICL Infrastructure proved steadier, with disposals validating NAVs and future dividend payments confirmed. Our property holdings also came under pressure reflecting a more downbeat assessment from investors towards domestic UK-focussed assets given subdued economic growth, inflationary pressures and a government that looks set to increase taxes to cover wider fiscal deficits. Empiric Student Property fell despite the agreed takeover from Unite whilst Helical was weak on no specific news. Workspace was flat over the month despite providing an encouraging update on lettings and the news that Saba, an activist shareholder, has built a 5% stake in the company. Paragon Banking Group also fell as expectations grew the upcoming budget might include a specific banking tax to help plug the gap in government finances. By contrast, our international equity holdings, such as Schroder Global Equity Income, Aberdeen Asian Income and Schroder Emerging Market Value performed positively helped by the relatively calm trade developments over the month, notably between the US and China. This also positively impacted both of our commodity focussed investment trusts. Finally, International Biotechnology Trust continued to recover from its April lows as a result of increased levels of mergers and acquisitions and a more conciliatory tone towards the sector emanating from the White House.
Over the month, we deployed some of the cash that has recently been built up by increasing our holdings in areas that have seen recent weakness. Notably, we increased our exposure to infrastructure, particularly renewables, where discounts have widened against NAV that have been rebased lower. Dividend yields of over 9% and discounts to NAV of over 25% look to be pricing in considerable negativity around future power prices and appear attractive relative to the return available from longer dated government bond yields. At the same time, we topped up our holdings in HICL Infrastructure and International Public Partnerships. We also added to CT Private Equity, Odyssean Investment Trust and Workspace.