Wise Multi-Asset Income

Additional agreements were reached with Vietnam and Indonesia, setting tariffs at 20% and 19% respectively, in exchange for expanded market access and commitments to purchase US goods, including energy and aircraft. Countries failing to strike deals—notably Canada and Brazil —were hit with steep tariffs ranging from 25% to 50%. Brazil faced the highest tariffs, reflecting broader political tensions. The EU narrowly avoided 30% tariffs by accepting a 15% tariff rate on most exports and agreeing to purchase large volumes of US energy. France and Germany voiced concern over the deal’s inflationary impact. Meanwhile, the US imposed a 50% tariff on copper and threatened a 200% tariff on imported pharmaceuticals. To keep negotiations with China alive, the US temporarily paused export restrictions. While customs revenues surged, inflation and geopolitical risk also increased, raising concerns over the long-term impact of Trump’s aggressive trade posture.

Domestically, Trump achieved a narrow vote to pass his flagship tax and spending bill. The legislation includes major tax cuts and increased border security funding, aligning with key campaign promises. The US economy remained resilient, with the jobs market remaining strong in June and unemployment falling to 4.1%, defying expectations amid trade uncertainty. However, inflation rose to 2.7% and core inflation hit 2.9%, prompting concerns from Federal Reserve officials. Tensions escalated when Trump suggested firing Fed Chair Jay Powell, causing brief market volatility. In the UK, Prime Minister Keir Starmer faced backlash after scaling back a major welfare reform to avoid internal Labour revolt, cutting £5 billion in planned savings. The political retreat triggered a fall in UK government bonds and a decline in the pound. UK inflation rose to 3.6%, its highest in 18 months, driven by energy, food, and travel costs. Meanwhile, public borrowing jumped to £20.7 billion in June, amid weakening payroll employment and slowing wage growth. China’s economy grew 5.2% in Q2, outperforming expectations despite weak domestic consumption. Exports surged 5.8%, likely front-loaded to avoid US tariffs. Beijing introduced new childcare subsidies to counter demographic challenges. In Japan, the ruling LDP lost its upper house majority, politically weakening Prime Minister Ishiba. Inflation expectations rose, driving Japanese bond yields to multi-year highs as speculation over fiscal stimulus intensified. The Eurozone’s inflation remained at the ECB’s 2% target, prompting a pause in further rate cuts.

In July, the IFSL Wise Multi-Asset Income Fund rose 2.5%, slightly behind the IA Mixed Investment 40-85% Sector, which rose 3.1%. Equity markets globally continued to move higher as market comfort grew that trade deals between large trade partners and the US looked set to be agreed at tariff levels no worse than forecast. US markets were notably strong for sterling investors as underlying strength was compounded by the dollar reversing some of the weakness it experienced in the first half of the year. By contrast, bond markets were weaker as yields on government bonds rose due to market unease over high fiscal deficits and concerns over the impact of higher tariffs on inflation. Commodity markets were mixed with copper negatively impacted by tariff moves whilst iron ore and oil were boosted by restocking by Chinese steel mills and receding fears of a tariff-induced shock to the global economy.

Over the month, the largest contribution to performance came from our infrastructure holdings, notably from those exposed to core infrastructure rather than power price exposed names. International Public Partnerships announced a further realisation from its schools’ portfolio to fund its £200m buyback plan. In addition, it announced it was committing £250m to the proposed Sizewell C nuclear reactor, at attractive returns with obvious risks, such as cost overruns, largely underwritten by the government. GCP Infrastructure announced a net asset value that was broadly flat over the latest quarter and that it had agreed settlement terms on a contractual claim that allowed for further debt paydown. The company is committed to disposing of further assets to prove up the net asset value, pay down debt and undertake further share buy backs. Greencoat UK Wind, however, saw its net asset value fall 5% over the quarter as power price forecasts were rebased lower and generation came in 14% below budget due to lack of wind. It is worth remembering, however that the shares traded down to a more than 30% discount at the end of March, far worse than the subsequent reduction in net asset value. At the same time, Greencoat announced the disposal of three windfarm assets in line with net asset value. The fund saw strong performance from its commodity holdings as well as across its equity holdings. Private Equity names, ICG Enterprise and CT Private Equity benefitted from the more positive market backdrop as well as from continued realisations and a takeover of a quoted peer at a material premium to the share price. Property was one area of weakness over the month despite encouraging trading updates from Helical, LondonMetric and Workspace.

Given the extended period of equity market strength following the Liberation Day shock in April, we have continued to rotate the portfolio away from areas that have performed strongly in favour of more defensive holdings. In particular, we have taken some profits in Ecofin Global Utilities & Infrastructure and Blackrock World Mining, both of which have enjoyed strong net asset value growth and narrowing discounts. We also reduced our holdings in Fidelity Special Values and Paragon Banking Group. The biggest additions were to our two bond funds, the Twenty-Four Strategic Income Fund and the Premier Miton Strategic Monthly Income Bond Fund.