TESL - A World In Flux: Managing Evolving Risks In Equity Markets

2025-04-15 08:20:00 ET

Summary

• From artificial intelligence to tariffs to macroeconomic uncertainty, threats are mounting to businesses, equity holdings and portfolio returns.
• Traditional risk management techniques struggle to identify correlations between sectors or industries that don’t seem to have much in common.
• Technology and materials are among the sectors that are more likely to suffer from tariffs, while utilities and financials might benefit.
• Applying advanced risk management techniques is essential to investing with conviction in today’s uncertain environment, which helps clients stay invested through short-term volatility and remain focused on long-term investing plans.

Originally published on March 27, 2025

By Nelson Yu & Jonathan Berkow

Risk management is being put to the test in 2025. How can equity portfolio teams cope with multiple hazards across equity markets this year?

It's hard to keep up with this year's fast-changing risk landscape. From artificial intelligence to tariffs to macroeconomic uncertainty, threats are mounting to businesses, equity holdings and portfolio returns. Bottom-up portfolio managers focused on company-specific outcomes could be particularly vulnerable to rapidly changing dynamics. This, in our view, is the most important overarching risk to manage in the current environment....

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