Time to be bullish or bearish? Five pros give their take

It’s become something of a cliché to talk about stock market investment as akin to a roller-coaster ride, but there are times when the cliché fits. The past two months have been full of thrills and spills, with President Donald Trump’s announcements on trade tariffs in April plunging markets into a tailspin – and his subsequent climbdowns supporting a recovery.

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The impact of “Liberation Day” was brutal, with the S&P 500 index dropping more than 12% over the following week; other global markets and many individual stocks fell even harder. Today, however, US equities are back above pre-Liberation Day levels, although for UK-based investors still down on the start of the year.

European markets have done even better – Italy and Germany, for example, are up more than 20% year-to-date, while the UK has delivered 7% or so in 2025. Much of Asia, on the other hand, has yet to recover its losses.

Where do we go from here - will the rest of 2025 bring more stomach-churning dives, or deliver an exhilarating upwards ride? To try to answer that question, we asked a range of fund managers how they’re feeling about the rest of the year.

A word of warning. Consensus is in short supply – underlining the uncertainties that come with the Trump administration, as well as the unknowns of other sources of disruption. These range from conflict in Ukraine and the Middle East to the influence of China, and from the impacts of digital transformation and artificial intelligence (AI) to the ongoing challenges of decarbonisation.

Still, here’s what the experts think.

Nathan Sweeney, chief investment officer of multi-asset solutions, Marlborough Investment

“We’re feeling cautiously bullish. A key reason is that the worst of the tariff news appears to be behind us. While we expect more tough talk from Trump if negotiations don’t yield the results he wants, future disputes are more likely to focus on individual countries or regional deals rather than sweeping, global, blanket tariffs. That makes the outlook less threatening for global trade overall.

“At the same time, the US is pursuing pro-business policies. Tax cuts and continued deregulation remain on the agenda. AI investment is still robust. The jobs market remains strong. Inflation is low. These are all supportive factors for economic growth and investor sentiment.

“With sentiment having turned overly bearish, we’ve actually increased our exposure to US equities. Valuations have become more attractive, and we see potential upside from here.

We’ve also added to Japan. Structural reforms are ongoing, and corporate profitability has improved steadily as a result. Japanese equities continue to benefit from both internal policy momentum and shareholder-friendly reforms.

“In addition, gold still warrants a position in portfolios. It acts as a hedge with concerns around government debt levels and fiscal sustainability lingering.”

Toby Gibb, head of investment solutions, Artemis

“The US equity market has been an exceptional performer for more than a decade and has come to dominate global equity indices. Between 2022 and 2024 it added some $20 trillion (£14.7 trillion) in market value – greater than the combined market capitalisation of Japan and Europe – and by the end of 2024 the US represented just under two-thirds of the MSCI All Country World Index.

“Perceived wisdom was that US stocks would continue their dominance. But the narrative has changed markedly, with investors questioning the notion of US exceptionalism. A significant weighting within global indices indicates historical outperformance versus other markets. As we’re constantly reminded, though, past performance doesn’t guarantee future results.

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“We’ve been underweight to the US market in our global portfolios. This has been a headwind, but we’ve been able to offset this through good stock-picking elsewhere.

“We see no reason to change our regional allocation and, if anything, expect an underweight to the US to become a tailwind.

“With DeepSeek challenging the notion of US technology dominance and uncertainty around tariffs and government indebtedness, we’re seeing investors question their allocations to the US – particularly as the dollar weakens.

“Valuations in Europe and many emerging markets are very attractive. With governments looking to expand monetary and fiscal policy, the outlook for domestically exposed companies is positive.

“Overall, this makes us bullish on the outlook for equity markets for the remainder of 2025 – unless, of course, Trump hurls another grenade from the White House rose garden, in which case all bets are off.”

Ben Mackie, senior fund manager, Hawksmoor Fund Managers

“The relative valuation of the US equity market, which trades well above long-term averages, adds further support to the case for rotation. Beyond the dominant US market we see some really interesting pockets of value.

“UK small- and mid-caps trade cheap relative to their own history, with the extent of the bargains on offer reflected in heightened M&A and the increasing number of companies buying back their own shares. Japan is another market with supportive valuations and high levels of valuation dispersion, where ongoing improvements in corporate governance and increased activism are helping unlock value.

“Beyond equities, infrastructure and other real asset investment trusts are trading on wide discounts and high yields despite defensive underlying assets and cash flows. Within credit, spreads are tight, but attractive all-in yields and increased yield break-evens offer decent prospective returns and margin of safety. 

“In summary, we are not bullish on global markets at index levels where valuations do not adequately compensate investors for increased uncertainty. We are, however, bullish on a range of smaller markets where valuations are supportive and already pricing in plenty of bad news. We have low exposure to US equities, but significant exposure to the UK, Japan and Asia as well as material allocations to real assets.”

Alex Illingworth, fund manager, Goshawk

“We use a process that integrates both the investment thesis and the valuation to inform our decisions. Yet companies don’t operate in a vacuum – geopolitics and macroeconomic factors are increasingly influential. The shift away from globalisation and rising government debt levels are negative forces on equity valuations. We’ve shifted some of our portfolio to reflect this.

“Historically, globalisation has enabled companies to expand markets, optimise global supply chains and access lower-cost resources. Increased trade friction or deglobalisation reverses these gains, pressuring margins and limiting growth opportunities. Even robust companies may struggle to pass on all costs, and tariffs can make entire markets unattractive.

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“Managing equities actually requires one to keep a close eye on the bond market – especially today, as government borrowing constraints are now a global phenomenon.

“The bond market has pushed back not only against UK and, more recently Japanese, fiscal expansion but also against ‘Trump 2.0’ US policies. This has resulted in rising yields, reflecting limited fiscal headroom. Few governments are able to counter this, and these higher yields are challenging equity valuations.

“In this environment it’s critical to focus on companies with strong balance sheets and reasonable valuations – those able to withstand multiple compressions and remain attractive versus a 4.5% ‘risk-free’ bond yield.”

Richard Bullas, portfolio manager, Martin Currie

“The UK has provided something of a safe haven during the recent global market turmoil. The uncertainty in global trade policies has shifted investor interest towards domestically focused companies, over those that rely on international trade. It is notable that domestic mid-cap stocks led the sharp recovery in the UK, outperforming international large-cap stocks.

“At the same time, positive sentiment is building towards the UK with mounting evidence that the economy is growing again. Prospects for the UK seem to be improving: first-quarter GDP growth came in ahead of forecasts, coupled with better than expected retail sales; this suggests consumers might finally be loosening their purse strings. Recent positive company updates show current trading has been good.

“Disinflationary forces will build during the second half of the year with inflation forecast to fall to its 2% target by mid next year. When inflation is finally tamed it will allow for interest rates to be cut further, acting as a catalyst for further spending and increased activity in the UK. The three recent trade deals that the UK has announced with the US, India and Europe, also help sentiment towards the UK.

“We believe now is the time for UK domestic mid- and small-cap stocks to shine. They've been out of favour for a number of years, but with valuations looking extremely attractive versus both historic and international peers, now is a good time to invest. Improving fundamentals, an uptick in sentiment, all coupled with attractive valuations, make us believe that recent performance is just the beginning.

“Stocks we’re positioned in to capture this improving outlook include homeware retailer Dunelm Group (LSE:DNLM), housebuilder Bellway (LSE:BWY), and buildings supplier Grafton Group Units (LSE:GFTU).”

How to manage uncertainty

As the views of our experts demonstrate, there is no clear view about how the rest of this year and beyond will unfold for markets – not least because so many unknowns remain.

Investors will need to concentrate on the basics, says Dzmitry Lipski, head of funds research at interactive investor. “Make sure your portfolio is positioned to perform under both slowing and recovering economic conditions,” he says. “While equities are a key source of long-term returns and inflation protection, bonds offer diversification, income stability, and lower volatility, especially during downturns.”

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For those looking for funds to deliver on these imperatives, Lipski has three suggestions.

“Artemis Monthly Distribution fund invests around 60% in bonds and 40% in equities; blending the two offers some of the capital and income growth potential of equities, along with the greater predictability of bonds,” Lipski says. “Geographically, the fund is primarily invested in the US and UK, with financials representing the largest sector allocation. The fund is well diversified, but its simplicity and a significant level of overseas exposure sets it apart from peers. The current yield exceeds 4%, making it a compelling option for investors seeking a balance of income and growth.”

WisdomTree Enhanced Commodity ETF - USD Acc GBP (LSE:WCOB) is Lipski’s second pick. “This fund offers investors a broad and diversified commodity exposure, covering major commodity sectors such as industrial metals, precious metals, energy and agriculture,” he explains. “The fund is well positioned to benefit from the current market environment and potentially to deliver higher real returns. Its effective cost management and lower risk profile is a competitive advantage against other funds in the sector.”

Lipski also suggests Capital Group New World fund. “It adopts a flexible investment strategy focused on companies based in, or economically tied to, developing countries,” he says. “This approach is designed to capture the growth potential of emerging markets while managing the associated risks diligently. “