Markets may have mostly returned to pre-'Liberation Day' levels, but confidence has been shaken. US president Donald Trump has demonstrated an unpredictable approach to trade, causing some experts to believe that a recession in the US might be the base case for the year. However, others have argued that the hard economic data is still broadly supportive and does not point to a slowdown.
With the US representing more than 70% of the MSCI World index, many investors have high allocation to the region in their portfolio, whether they own American funds or those with a worldwide remit. As such, a US recession could have major implications on investors’ portfolios and may leave them wondering how they can ensure they are prepared for any possibility.
Below, experts identify three funds that can thrive this year, whether a US recession plays out or not.
JPM Natural Resources
Chris Metcalfe, chief investment officer at IBOSS, identified the JPM Natural Resources fund as a “genuinely all-weather fund”.
It has a low correlation to an average global fund because it holds assets such as oil, gas and precious metals. This has allowed the portfolio to perform well so far in 2025, while sectors such as IA Global and IA North America have struggled.
Performance of the fund vs sector year-to-date
Source: FE Analytics
“Based on needs rather than agendas, the world has underinvested in many real assets and commodities for years,” Metcalfe said. Additionally, Donald Trump’s “whack-a-mole approach to tariffs” makes a well-diversified set of assets beyond bonds and equities more important, he said.
He also highlighted the experience of managers Christopher Korpan and Veronika Lysogorskaya, who have “vast and complementary experience in the commodities” space since 2010, giving them experience guiding the fund through market volatility.
“This fund can add value at any point in the economic cycle, regardless of whether an economy is in a recession,” Metcalfe concluded.
Troy Trojan
Ben Yearsley, director at Fairview Investing, said: “History repeats itself. Managers always try to predict whether a recession will happen and get taken to the cleaners.”
Rather than betting on one specific macro outcome, he argued that a “one-stop shop fund” such as Troy Trojan is a great option. Led by FE fundinfo Alpha Manager Sebastian Lyon and Charlotte Yonge, it was a compelling option due to its asset allocation. The managers focus on gold, quality equities and inflation-linked bonds and pivot the allocations based on the macroeconomic environment.
These assets provide “natural hedges in rougher periods” when volatility is high and investors are worried about the future, Yearsley explained. For example, the fund has surged by 5.7% over the past year, a top-quartile result in the IA Flexible Investment sector as market volatility has risen.
Performance of the fund vs the sector and benchmark over the past year
Source: FE Analytics
He added that the fund could further outperform in a recession, with further interest rate cuts benefiting the bond and quality equity part of the portfolio. However, even if a recession does not fully play out, the strategy will continue to deliver some value for investors.
“This is a good one-stop shop fund – it will rarely be the top or bottom of the performance charts, but its focus on preservation of the real value of your wealth is a great place to start,” Yearsley concluded.
Polar Capital Global Insurance
Finally, Paul Angell, head of investment analysis at AJ Bell, identified the Polar Capital Global Insurance fund.
The fund invests primarily in insurance underwriting and financial companies, which are less reliant on macroeconomic factors and more on regulation, insulating it from a recession, he explained.
Additionally, if a recession materialises and interest rate cuts occur, “the capital value of these underwriting companies will actually rise”. He said this is because these businesses generate returns through their own investment portfolios of high-yielding short-dated bonds, which will look more attractive if rates are cut.
Equally, these insurance companies can benefit if a recession fails to materialise. For example, risks to companies are getting more complex, as cyber-attacks become much more common, which increases the demand for these insurance-focused businesses, Angell explained.
Over the past 10 years, the fund is up 247.7%, the best result in the IA Financials and Financials Innovation sector. Over this period, it was the best-performing strategy in several calendar years, including 2022, when the bear market caused a decline in many investors' portfolios.
Performance of the fund vs the sector over the past 10yrs
Source: FE Analytics
Angell added: “Regardless of the economic scenario, it benefits from many of the elements that make for a great specialist fund – a genuine niche in market exposure, an experienced and specialised team, and the corporate backing of a committed parent.”