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Investment Strategy

Published March 17, 2025 | 10 min read time

Weekly market insights and possible impacts on investors from the Wells Fargo Investment Institute Global Investment Strategy team.

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Asset Allocation Spotlight: Recent downturn shows the value of diversification

  • Recent weeks have highlighted the value of diversifying from holding solely U.S. equities.
  • We favor diversifying with fixed income and commodities, and with exposure to international asset classes.

Equities: Volatility — and opportunity — have arrived

  • We believe growth concerns — and the pullback in equity prices — will be transient as the economy proves resilient and earnings growth robust as we expect.
  • We tilted more aggressively in portfolios and upgraded U.S. Mid Cap Equities from neutral to favorable as a result.

Fixed Income: What to watch as Fed meeting approaches

  • While the upcoming Federal Open Market Committee (FOMC) policy meeting is unlikely to hold any surprises as rates are widely expected to remain unchanged, we will be looking for updates on the pace of the Federal Reserve's (Fed’s) balance sheet reduction, given its implications for market volatility.
  • Amid economic and policy uncertainty, we see U.S. Intermediate Term Taxable Fixed Income as striking the greater balance between yield generation and price volatility.

Real Assets: Mixed tariff implications for U.S. steel industry

  • Domestic steel prices have risen in anticipation of tariffs placed on steel imports, particularly from Canada and Mexico.
  • Higher steel prices are a benefit to U.S. producers, but the duration of tariffs and their impact on underlying steel demand drive heightened uncertainty for investors.

Alternatives: Incorporating hedge funds to navigate volatile markets

  • The recent market volatility may spotlight the impact of the rising concentration in many equity-centric portfolios as markets are increasingly driven by a few mega-cap technology-oriented companies.
  • By adding hedge funds to a portfolio of traditional stocks and bonds, investors may build a more resilient portfolio with the potential to withstand periods of elevated market volatility.

Article written by:

Investment Strategy Analyst
Investment Strategy Analyst

Head of Global Fixed Income Strategy
Intern, Global Fixed Income team
Equity Sector Analyst

Global Alternative Investment Strategist