Today, Edmond de Rothschild Asset Management (AM), a UK-based company with its headquarters in Paris, revealed a major strategic shift. In its outlook for the second half of the year, AM makes no secret of moving to a stance that is clearly pro-European and shorting US stocks relative to US stocks.
The move comes amid increasing trade fears and a confusing geopolitical landscape. The firm notes that even as markets around the world continue to gyrate, Europe is becoming a more interesting investment story, relative to the US.
Why We Are Underweighting US Equities
Edmond de Rothschild AM’s sceptical view on US stocks is mainly due to the ongoing trade dispute and a murky US policy. This is how Benjamin Melman, Global CIO at Edmond de Rothschild AM, put it: “The US/China negotiations could last a long time, and those with Europe are not going to be simple.
We have for the past six months been modestly underweight equities, particularly US equities, and in the dollar.” The new US tariffs rising on imports from Japan and South Korea, which will take effect on August 1 unless there are new trade pacts, dramatically demonstrate the erratic US trade policy further.
Together with worries about the high asset valuations in the US market and policy risk in general, all that feeds into the firm’s prudential stance on US assets with a lesser exposure on their portfolios.
European Stocks: A “Powerful New Narrative” It was a mixed start to the week, with economic data out of the Eurozone delivering support to the majors.
Completely opposite to their view of the US market, Edmond de Rothschild AM is responding to an exciting ‘new narrative’ in Europe. “There is a real continent in the world, which is again in profound transformation, on the basis of new political and economic ambitions, and that continent is Africa,” said Caroline Gauthier, co-head of equities.
There are a number of reasons for this good feeling. The industrial strategy also includes the “Draghi plan” on European competitiveness, which emphasises the need to promote innovation and reform competition law and is viewed as a serious booster.
And the resurgence of German leadership along with rising defense spending across the continent will mean stronger economic prospects. This regained confidence can be seen in the strong recovery of Eurozone equities in 2025, with a spectacular +12% gain (+25% in USD terms), confirming Europe’s reassertion of its economic fate.
The firm emphasizes the attractiveness of European small caps, noting the domestic nature of this category is “partly protected from trade-related tensions and dollar volatility” and is central to Europe’s manufacturing base and industrial innovation.
Portfolio Strategy and Broader Considerations
In global equities in general, the stance of Edmond de Rothschild AM is still slightly underweight, reflecting an overall cautious perspective in a context of market volatility. The move to bring in European equities is part of its strategy to diversify and to move into alternative asset classes that can still provide some level of resiliency.
In addition to equities, the firm remains positive about short-term high-yield debt and other forms of fixed income which it deems “safe havens” on the basis of their high carry and economic cycle. Jacques-Aurélien Marcireau, co-head of equities, highlights a refocusing on themes such as resilience and health as the dominant macro investors’ trends that are driving investment in all asset classes around the world in order to build robust, innovative and adaptive portfolios. You can read more about Edmond de Rothschild Asset Management’s investment strategies and outlook on their official website. You can read more about Edmond de Rothschild Asset Management’s investment strategies and outlook on their official website.
Conclusion
The short-term outlook by Edmond de Rothschild AM highlights the fact that ongoing trade concerns and a shifting geopolitical environment are forcing investors to rethink conventional market hierarchies.
The firm’s unique conviction in European equities, with particular emphasis on small caps, reflects a confidence in Europe to offer resilience and attractive investment opportunities in an increasingly fragmented and uncertain global investment landscape.
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