Based on a conversation1 between David Richardson, Head, Enterprise Strategy, RBC Global Asset Management, and Stuart Kedwell, CFA, Managing Director, Senior Portfolio Manager, and Global Head of Equities at RBC Global Asset Management
In this market and economic climate increasingly dominated by policy shockwaves and geopolitical uncertainty, investors are seeking not just direction, but conviction. When the latest round of U.S. tariffs was announcedâwhat David Richardson, dubs âthe big bazookaââit sent ripples across global markets. Yet for Stu Kedwell, the moment is not a cause for panicâit is a signal to get to work.
âThis is a day where you and the team are relatively active,â Richardson observes, ânot only from working, analyzing, doing the calculations, crunching the numbers, but actually in market making moves?â Kedwellâs response is as deliberate as it is calm: âYep. And I expect that that will likely continue⌠Youâre likely to make some changes that you think are improving the odds of longer-term success.â
This is where active management earns its keep.
The Unexpected Playbook of Predictability
At first glance, the White Houseâs new tariff policy seemed like a curveball, but Kedwell reminds us that it wasnât completely unpredictable.
âIt was different than people thought it was gonna be⌠but you could actually go back and look at countries and their specific trading relationship with the U.S., and you could almost have calculated where this tariff was going to come in,â Richardson notes.
Kedwell agrees but adds nuance:
âThe way that some of the tariffs were calculated was a little bit of a surprise⌠particularly some of the impact on U.S. consumer stocks that import from a variety of areas.â He flags the exemptions list as another wildcard, noting that âmaybe a third of U.S. imports might be exempt from some of the tariffs.â
The devil, as always, is in the exemptions.
Markets React. Professionals Prepare.
Rather than interpret volatility as chaos, Kedwell frames it as an opportunity for disciplined recalibration.
âYou know, before the market opens, youâve kind of taken note⌠the market is trying to handicap the possibility of a slowdown in earnings,â he says. In moments like these, Kedwell and his team lean into scenario refresh: âItâs not a new analysis. Itâs just a refreshing.â That means sector-by-sector reviews, re-evaluating downside cases, and identifying which stocks are flirting with bearish assumptions.
And itâs not just about picking winners. Itâs also about understanding dislocations. âWe do have many of these defensive names. Is the spread in valuation between the defensive name and something that might be a little bit more cyclical too wide?â
This is how professionals convert short-term dislocations into long-term positioning.
Clarity and Uncertainty: The Tug-of-War
Ironically, in laying out the mechanics of the tariff rollout, the administration offered a dose of clarityâbut also reignited uncertainty.
âThereâs more certainty because heâs detailed the mechanism⌠but the other side to it is the uncertainty around the estimates of the significanceâyou could drive a truck through [them],â Kedwell quips. Economistsâ predictions on impact vary widely, with some suggesting as little as 10â13% and others closer to 18%, depending on exemptions.
This uncertainty has a tell: âWhen you see movement in the currency market like weâve seen, I think that is the signal of uncertainty,â Kedwell emphasizes. The U.S. dollar fell, and bond yields dippedâbut not as much as expected, leaving open questions about how much of the news had been priced in.
Behavioral Finance in Action
What separates the professionals from the masses isnât just insightâitâs temperament.
âIâm not walking the trading floor to look at anything specific⌠Iâm looking more for the tone,â Richardson reflects. âIt was just a very, very calm environment⌠thereâs just no emotion in the calculus.â
Kedwell agrees, describing the teamâs process as âvery iterative.â He explains, âYou know that ultimately, thereâll be opportunity to find its way out of this⌠weâve seen stock price change. We havenât quite seen a full valuation change relative to the uncertainty rise. But uncertainty rising, valuation improving is⌠something that eventually we want to lean into.â
This is the real advantage of professional investment management: unemotional analysis driven by systems, not sentiment.
Strategic Flexibility, Tactical Patience
Kedwell outlines a three-bucket framework for making portfolio decisions amid volatility:
- Deploying Cash: âWe do have some cash⌠putting that cash to work.â
- Relative Valuation: âIs the spread in valuation between the defensive name and something a bit more cyclical too wide?â
- Intra-Sector Adjustments: âTwo defensive stocks or two more cyclical stocks that are reacting differently today⌠maybe thereâs opportunity there.â
On the asset allocation front, the rally in bonds opened up rebalancing discussions. âWhile the equity market is selling off, the bonds are rallying⌠do we want to do some rebalancing?â he says.
This is not âset it and forget it.â Itâs adapt, assess, and actâwith discipline.
For Long-Term Investors: Stay the Course, Strategically
The volatility may have spiked, but the advice for long-term investors remains steady.
âNo. I think it is,â Kedwell responds when asked if this level of activity was necessary for someone saving for retirement twenty years from now. âLong-term earnings growth is not very volatile, but share prices on any given day can be.â Tariff disruptions may prompt corporate restructuring, but they donât undermine the broader investment thesis. âManagement teams⌠are coming up with new plans⌠business will find new ways to make money.â
And yes, the old faithful strategy still works.
âWeâve been⌠obviously, weâre the dollar cost average player,â Kedwell says, with a smile, âthatâs the way to kind of approach this environment.â
A Real-Time Case for Active Management
âThis is what I wish most investors could see,â Richardson muses. âJust the behavior and the personality⌠the way investment managers react.â Calm, deliberate, analytical.
This isnât just a discussion of tariffsâit's a masterclass in navigating market shocks. âYou donât come to work each day saying, âI need to change my portfolio,â but the puzzle pieces change⌠and sometimes itâs significant,â Kedwell says. âYou're likely to make some changes that you think are improving the odds of longer-term success.â
In volatile markets, that kind of clarity isnât just valuableâitâs essential.
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1 "Tariff turbulence: Adapting with active investment strategies." RBC Global Asset Management, 3 Apr. 2025, www.rbcgam.com/en/ca/insights/podcasts/tariff-turbulence-adapting-with-active-investment-strategies/detail.
Disclosure: This editorial article is based on the RBC GAM podcast episode "Tariff turbulence: Adapting with active investment strategies" featuring David Richardson and Stu Kedwell. The views expressed are for informational purposes only and should not be construed as investment advice. Please consult a financial advisor before making investment decisions.