Three trades to navigate U.S. Big Tech disruption
A portfolio manager at Julius Baer has sketched out trades for investors looking to dial down their exposure to U.S. AI as investors cool on the sector. “There’s a lot of disruption in the U.S. at the moment,” Tom Watts told CNBC’s “Squawk Box Europe” Tuesday. “It comes in three stages how you can diversify away from those AI tech names that have been so hot over the last few years.” First: diversify within the U.S. Watts said Julius Baer has been using an equally-weighted S & P 500 tracker as a “nice, cheap, efficient way” to reduce concentration risk in mega-cap tech names. “This tracker gives you exposure to other sectors that you might not have had if you’d bought a market-weighted tracker,” Watts said. Secondly, Watts said, investors can also diversify away from the U.S. altogether. “It’s not caught on yet… but we’ve had ‘Buy America’ — and now it’s ‘Bye America’.” Here, Julius Baer outlined a “constructive but balanced” stance on global equities. In its 2026 Market Outlook, the Zurich-headquartered private banking group said that, while AI remains a performance driver, “investors can diversify with defensive healthcare, Swiss equities, Europe’s cyclicals, and Asia-led emerging market strength.” Turning to geopolitical and macroeconomic themes, Watts observed how 2026 is set to be characterized by diverging global policies in the form of “two-speed rate-cutting” among global central banks. XAU= YTD mountain Gold spot. The U.S. Federal Reserve is likely to reduce rates further, with the Bank of England cutting quicker than many investors expect, Watts said. He added that the European Central Bank, by comparison, “maybe has one more cut” before maintaining rates at their current level, after which it will begin raising rates in the coming years. In this context, gold continues to be an attractive play, Watts said, particularly due to renewed uncertainty over U.S. President Donald Trump’s tariffs. He said Julius Baer continues to have a “decent position” in gold, noting that there continues to be central bank buying and geopolitical tensions. RKT-GB YTD mountain Reckitt Benckiser. Zeroing in on single stock bets amid continued concerns over a tech-related sell-off, Watts highlighted fast-moving consumer goods names, such as Procter & Gamble in the U.S. and Reckitt Benckiser in the U.K., as staple stocks that are historically well-placed to weather bouts of uncertainty and volatility. “Those kinds of companies, staples really, that have got consistent earnings, subscription-based shares, deep economic moats as we call them, good management that have seen all this before. “Those kinds of companies tend to do well. We have seen that during lockdown. We saw it during harder times.”
<
