What Trump 2.0 means for investments – and funds that could benefit

• Half the most-bought investments on interactive investor since Trump’s election win on 6 November 2024 (to 15 January 2025) are US centric

With Donald Trump set to be sworn in as the 47th President of the United States on 20 January, interactive investor, the UK’s second-largest DIY investment platform, examines what his presidency could mean for investments.

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Alex Watts, Fund Analyst, interactive investor, says: “Trump will have a lot on his plate when he returns to the White House, facing challenges ranging from a heavily indebted America with a soaring budget deficit to two major conflicts on the global stage. Beyond the volatility that these challenges may bring, investors can start to identify areas and sectors that might benefit from the policy direction of Trump 2.0.”

Half of interactive investor’s top 10 investment bestsellers are US-centric 

Since Trump’s election win on 6 November 2024 (up to 15 January 2025), half the most-purchased investments on interactive investor have been US-centric.

This includes four US listed stocks – MicroStrategy Inc Class A (NASDAQ:MSTR) (a bitcoin proxy), NVIDIA Corp (NASDAQ:NVDA), Tesla Inc (NASDAQ:TSLA), and the software company Palantir Technologies Inc Ordinary Shares - Class A (NASDAQ:PLTR) – as well as the Vanguard S&P 500 ETF USD Acc GBP (LSE:VUAG).

Source interactive investor

Alex Watts says: “The US equity market throughout much of 2024 was driven by a narrow set of large-cap, internationally focused businesses concentrated within the Tech and Comms sectors. There is, however, a logical assumption that Trump’s trade restriction policies aiming to support domestic US businesses at the expense of foreign exporters, tax breaks for US manufacturers and his rhetoric regarding deregulation, could see different areas of the market perform well. 

“This effect has already been felt in the two months since Trump’s election victory, as market returns spilled out to other sectors, including financials, energy and consumer discretionary (albeit the latter owes much to Tesla).”

Sectors and funds that could benefit from Trump’s policies

US smaller companies

Alex Watts says: “Typically, smaller businesses have greater sensitivity and revenue exposure to their domestic economies, compared with more outwardly exposed large-caps. For example, the S&P and Nasdaq derive 59% and 52% of revenues from the US, versus close to 80% for the Russell 2000. That factor could be an asset as Trump looks to support US businesses, such as through a reduced corporate tax rate for domestic producers. Depending on the extent to which the much talked about tariffs materialise, the domestic focus of these smaller businesses could provide some buffer from fallout from protectionist policies.

Fund pick: Artemis US Smaller Companies Fund 

“The fund offers exposure to innovative and fast-growing small companies in the US. Some 55% of portfolio is invested in stocks with market caps below $10 billion, and 33% of the portfolio is between $5-10 billion. 

“The managers believe the breadth of US small caps allows them to target specific themes, including areas such as onshoring and housing shortage. Cormac Weldon is head of the US equity team at Artemis and he runs the fund alongside Olivia Micklem. The fund has a strong record of beating the market over the long-run and is in a good position to benefit from domestic US growth.”

Infrastructure

“Trump has been, both in his first term and now ahead of inauguration, vocal regarding his intention to “rebuild” infrastructure in America. Investors must also weigh this promise against his rhetoric that he would repeal the Inflation Reduction Act by rescinding as yet unspent funds – although Biden’s work to allocate funds prior to the end of his term, as well as the potential to damage domestic manufacturing that clawing back funds could cause, perhaps mitigates this threat.”

Fund pick: FTF ClearBridge Global Infrastructure Fund

“The fund aims to both generate a reliable income from dividends of underlying companies, as well as to achieve capital growth above inflation over a five-year period. The fund is invested across a range of infrastructure-related equities and the managers, the experienced Nick Langley, Shane Hurst, Charles Hamieh and Daniel Chu, pay little mind to any benchmark. They focus on regulated and contracted utilities, such as water, electricity as well as user-paying assets. 

The team looks for businesses with predictable cash flows, healthy yields and quality asset bases. It’s a defensive fund with a strong and consistent yield of around 4.5%. The fund has proven it can deliver capital appreciation alongside a steady dividend distribution, which has made it one of the best performing funds in its sector over the long term.”

Digital assets

“Trump has made clear his positioning as a pro-digital assets and pro-crypto president, somewhat in contrast with the tone of his first term. While his idea of a Federal bitcoin could be a longshot, Trump has made clear his intention to the US a hub of cryptocurrency innovation and has met with various industry stakeholders, such as mining execs and Michael Saylor. Bitcoin price reacted to news of Trump’s win positively and shortly after hit new all-time highs at over $100,000."

Fund pick for differentiated exposure to the US: Neuberger Berman US Multi-Cap Opportunities Fund

“Investors seeking a flexible, differentiated exposure to the US versus the Tech and Comms stocks that dominate the S&P index may consider the Neuberger Berman US Multi-Cap Opportunitiesfund. 

“The fund, managed by Richard Nackenson, invests in a concentrated set of companies across varying sizes and without stylistic constraint. While the fund is permitted to and does invest in familiar large/mega-cap companies, such as Microsoft Corp (NASDAQ:MSFT) and Apple Inc (NASDAQ:AAPL), the manager diversifies also into mid-cap names and, as such, the average market cap of the fund of $700 billion is notably less than its S&P 500 benchmark’s $1.1 trillion. 

“Stock picking flexibility is reflected in the fund’s resultant sector allocation, which favours Financials at 22.5% of the portfolio (9% overweight), Industrials at 12.5% (4% overweight) and Materials at 9% (7% overweight), while being underweight both Tech and Communications sectors. 

“Compared with its flex-cap peers, the fund is a strong performer over the past decade despite a relatively neutral style profile that has been less in favour than a more growth-focussed option.” 

Impact of proposed tariffs on imports

Richard Hunter, Head of Markets at interactive investor: “Trump has already announced that he intends to introduce swingeing tariffs on imported goods, which he believes are essential to reduce food prices and the federal deficit, while also boosting domestic manufacturing.

“These range from 20% to Europe (there would be a large impact on the UK, whose second largest export destination is the US), 25% to Mexico unless the illegal drugs inflow is stemmed and 60% on China, where relations are already fractious.

“In any event, progress will be closely watched for extra pressure on supply chains, inflationary impact and even derailing the Federal Reserve’s plans to reduce interest rates.

“Trump is a known negotiator, and these comments may prove to be his opening gambit rather than the real figures he may have in mind. For the moment, though, he seems to be singing a similar tune. Indeed, should he deliver his campaign rhetoric, this could result in higher inflation through those tariffs as well as tighter immigration measures and tax cuts.

Impact on personal finances

Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “By increasing the cost of goods imported into the US, these tariffs can disrupt international trade flows and drive-up production costs for companies reliant on global supply chains. 

“For Britons, this could manifest in higher prices for everyday items - particularly imported US goods such as electronics and clothing. Ultimately, while the direct impact may vary, the broader economic ripple effects could strain household budgets.”