Soren Funch Adamsen

Before the US election we had reduced risk by lowering our allocation towards equities as well as our active risk within our equity strategy. Heightened uncertainty in the US election had made forecasting the near-term effects on financial markets more complex. Risk management adjustments included the elimination of our overweight stance in European equities and a reduction in our underweight positions in the Pacific, Canada and Japan. Nevertheless, we maintained an overweight position in US small caps, which were projected to perform favourably should Donald Trump secure the presidency.

Following Trump’s election victory, we have increased our prediction of US growth for 2025 to 2.2% compared with Bloomberg’s consensus of 1.9%. We therefore have increased our US equity exposure and are now overweight equities. 

We continue to favour US small-cap equities and maintain our overweight position. Small caps are projected to yield favourable returns under the Trump administration. Strategically, we are now overweight hedge funds and illiquid alternatives, recognising their appeal both in terms of diversification and enhanced returns.

Superforecasting, Dan Gardner and Philip E. Tetlock