Although markets have shown a modest recovery since our recent webinar, the ongoing uncertainty surrounding Trump’s tariffs and their impact on global markets means it’s not the time to overemphasise short-term performance.
For those who were unable to join us live, the webinar recording is now available here. We’ve included timestamps to help you navigate quickly to the sections most relevant to your interests and situation.
Stephen O’Sullivan has also written a more detailed analysis of the latest tariff situation which can also be viewed here.
One of the key takeaways from the webinar, from Tideway’s perspective, was the emphasis on portfolio construction and the importance of diversification. As discussed in detail during the session, we believe our multi-asset portfolios are well-positioned for both the short and long term. Their diversified nature helps reduce volatility and reduces the need to draw heavily from equities during periods of market stress and provides a source of liquidity for those drawing down on their portfolios.
We also highlighted that while current equity market fluctuations may feel unsettling, they are not unusual in a historical context — though, as ever, the timing of such movements remains challenging to predict with consistency.
Diversification in Tideway Multi-Asset Portfolios
Equities have historically been the best-performing asset class, offering strong long-term returns. However, they are also among the most volatile, influenced not only by company fundamentals but also by a wide range of external factors. Market sentiment—driven by emotions like fear and greed—often amplifies price movements, causing markets to swing well beyond what fundamentals alone would suggest.
Equities are therefore not a consistent or reliable source of capital for investors who need to make regular withdrawals, as they risk being forced to sell during market downturns at depressed prices.
Furthermore, Tideway does not operate a unitised strategy (one investment fund with many different asset classes – equities, fixed income, alternatives – held within that one fund), which allows for greater selectivity when deciding which assets to sell. In contrast, a unitised strategy requires selling based on the Net Asset Value (NAV), which effectively sells across all assets in the portfolio, regardless of the performance or suitability of individual assets.
This flexibility enables more effective risk management and potentially reduces the impact of selling in unfavourable market conditions.
Portfolio Construction and Liquidity in Tideway Portfolios
Portfolio Yield
The average yield of Tideway portfolios is just under 4% before fees. This level of income already goes a long way in supporting sustainable annual withdrawals for investors, reducing the need to sell assets in volatile markets.
Money market funds / Short Dated Gilts
These are a core component of Tideway’s lower-risk multi-asset portfolios. With durations typically under 60 days, they offer extremely low volatility and serve as a quick and reliable source of liquidity when needed, making them ideal for meeting short-term cash flow needs above and beyond the natural yield of the portfolio.
Absolute Return Strategies
Ruffer Diversified Return– While absolute return strategies may underperform during strong market rallies, they demonstrate real value during market sell-offs. Ruffer, in particular, has successfully anticipated and positioned for every major market downturn this century. As a point of reference, the Ruffer Diversified Return strategy has delivered a return of +4.5% so far in 2025. Tideway portfolios currently allocate between 7% and 11% to this strategy in multi-asset portfolios, offering meaningful downside protection and of course liquidity if necessary.
Short Dated Credit
These strategies provide attractive yields with limited interest rate risk, making them effective at preserving capital over short- to medium-term periods. Despite incurring losses during the fixed income rout of 2022—one of the worst years for bonds in recent memory—they recovered swiftly and reached new highs shortly thereafter.
With high all-in starting yields, we anticipate any short-term losses being recovered quickly.
Equity performance dispersion
Although equities tend to correlate during broad market downturns, Tideway aims to mitigate this by selecting strategies with differing risk exposures and return drivers. For example, Artemis Global Income has delivered strong performance year-to-date, up over 3% at the time of writing. This level of diversification enhances resilience and helps maintain flexibility around portfolio withdrawals, even in challenging equity environments.
Equities
The chart above shows both intra-year gains/losses and the calendar year returns of the 3,000 largest publicly listed companies in the U.S.
It highlights that even in years where equities deliver strong annual returns (represented by the orange dot), the path to those returns is rarely smooth.
A notable example is the Covid-affected year of 2020:
- Investors who reviewed their portfolios only at year-end saw a return of nearly +20%.
- Those monitoring more frequently experienced a 35% drop from the peak and a 70% rebound from the market low — a far more stressful journey.
While 2020 was particularly volatile, most years in equity markets include some level of drawdown, making short-term fluctuations a normal part of long-term investing.
At its lowest point so far this year, the S&P 500 briefly entered bear market territory (-20%) for Sterling-based investors. This level of decline is not as rare as it may seem — historically, the S&P 500 has experienced a 20%+ sell-off roughly once every four years.
While understandably unsettling, such volatility is part of the market’s natural response to an uncertain future. “Garden variety” drawdowns of -10%, occur more frequently — more than once every two years on average. Volatility and market pullbacks are simply an unavoidable part of the journey when investing in equities.
This leads to a natural question: should investors attempt to time these drawdowns? The table below shows the returns on £10,000 invested in MSCI World on 3rd January 2005 to the end of 2024.
The blue bars above (and numbers in the orange box) show the final investment value a UK investor would end up with after putting £10,000 into the MSCI World Index for 20 years. The green dots are the annualised return.
Hopefully as both the chart and the table illustrate, missing just a few of the best days over a period as long as twenty years meaningfully lowers long term returns.
It would of course be unusual for an investor to exit the market the day before the best trading day and re-enter the day after, so this illustration is a worst case-scenario of missing the best trading days.
However, it must be noted that the best and the worst trading days often appear very close together making timing decisions a game of luck at best.
For example, just last week the MSCI World Index made +6.5% (GBP) on Wednesday 9th April, after back-to-back days of significant losses.
This would have ranked 5th best trading day from Jan 2005 to 9th April 2025.
By going to cash on this bad news, anticipating further drawdowns to come, would have caused us to miss this short-term recovery. Doing this just a few more times and getting unlucky can materially affect your returns.
Tideway conclusion
Tideway portfolios are specifically constructed to avoid the need to sell equities during periods of market volatility, with multiple sources of liquidity available before equity sales become necessary.
Thanks to this diversification, Tideway can remain fully invested in equities without being forced into reactive decisions during turbulent periods.
There is little to no evidence that market timing can be done consistently well. In fact, missing just a few of the market’s best trading days — which often occur close to the worst days — can significantly reduce long-term returns, even to levels below those of lower-risk asset classes.
