Janus Henderson's Strategic Retreat from US Markets: Navigating Trump's Tariff Turmoil

In a landscape reshaped by geopolitical volatility, Janus Henderson, a $379 billion asset manager, has signaled a cautious recalibration of its U.S. equity exposure, considering a 10% reduction amid escalating trade tensions under President Trump’s second term. This strategic shift reflects growing concerns over the economic and market consequences of protectionist policies, including tariffs on steel, aluminum, and automotive imports, which have triggered sector-specific selloffs and broader market instability.

The Catalyst: Tariffs and Market Volatility

President Trump’s 2025 tariff announcements—targeting key industries and global trade partners—have sent shockwaves through U.S. markets. reveals a 12% intra-month decline, the steepest since the 2020 pandemic crash, as investors priced in the risks of a trade war. Sectors like autos (e.g., Ford, GM) and appliances (e.g., Whirlpool) bore the brunt, with shares plummeting as tariffs raised input costs and retaliatory measures loomed.

The ripple effects extended beyond equities. Fixed income markets faced revaluation as interest rate expectations shifted. The Federal Reserve’s reluctance to cut rates aggressively—despite rising unemployment risks—left investors scrambling for stability in high-quality bonds.

Janus Henderson’s Portfolio Rebalancing

The firm’s proposed 10% reduction in U.S. equity exposure is not a blanket sell-off but a targeted reallocation rooted in three pillars:

1. Sector-Specific Risks:
   Janus Henderson’s skepticism toward overvalued tech stocks, such as the “Magnificent Seven” (Mag7), is evident in its portfolio. shows corrections of 20–30% as claims of overhyped AI capabilities and rising interest rates dented growth stock valuations. The firm now holds only two of these stocks, prioritizing yield and stability over speculative growth.

2. Fixed Income as a Ballast:
   The firm is emphasizing high-quality fixed income to counter equity volatility. Sectors like commercial mortgage-backed securities (CMBS) and collateralized loan obligations (CLOs) offer attractive yields (5.6% for AAA CLOs) amid expectations of “higher-for-longer” interest rates. CMBS,受益于 office vacancy stabilization and bifurcated real estate markets, provide diversification, while CLOs benefit from floating-rate structures.

3. Geopolitical Uncertainty:
   With trade negotiations ongoing and retaliatory tariffs from Canada and the EU, Janus Henderson sees prolonged uncertainty. The firm’s neutral stance on U.S. assets and slight underweight on international holdings reflects this cautious outlook.

Macroeconomic Context and Risks

The Federal Reserve’s policy dilemma underscores the complexity of the environment. While Trump’s fiscal stimulus (tax cuts, infrastructure spending) could boost growth, tariffs risk inflating input costs and stifling corporate margins. The Fed’s options are constrained: cutting rates aggressively risks fueling inflation, while inaction prolongs the “higher-for-longer” rate environment.

Historical precedents suggest resilience. Over the past 40 years, U.S. markets have experienced 10%+ drawdowns in nearly half of all years, often followed by rebounds. However, the speed and scale of the 2025 selloff—driven by geopolitical noise—highlight the need for active management.

Conclusion: A Prudent Play for Uncertain Times

Janus Henderson’s proposed 10% reduction in U.S. equity exposure is a pragmatic response to a volatile landscape. The firm’s focus on fixed income—particularly sectors like CMBS (yielding 4.8%) and CLOs (5.6%)—provides a critical buffer against equity volatility while capitalizing on yield advantages.

The Mag7’s struggles and the S&P 500’s 12% intra-month plunge underscore the risks of overexposure to growth stocks and tariff-sensitive sectors. Meanwhile, historical data shows that disciplined rebalancing, like Janus Henderson’s shift to fixed income, can mitigate downside while positioning investors to capture recoveries.

As Trump’s policies reshape global trade dynamics, the firm’s strategy balances caution with opportunity. Investors would be wise to heed this lesson: in an era of geopolitical turmoil, diversification and active management are not just tools—they are necessities.

Key Data Points:
- S&P 500 decline: 12% in April 2025 (intraday).
- Mag7 tech stocks: Average corrected 25% YTD as of Q2 2025.
- CLO yields: 5.6% (AAA-rated), CMBS yields: 4.8%.
- Fed funds rate expectations: 4.25%-4.50% in 2025, easing to 3.5% by early 2026.