Despite moves towards European equities, a new survey released by California-based investment manager Franklin Templeton explores the sentiment of UK Independent Financial Advisors (IFAs) towards US equities, showing some are holding firm.

Although a number of investment managers have recently favoured European over US equities, a new survey released by Franklin Templeton found that 64 per cent of UK IFAs have been advising their clients to either maintain (50 per cent) or increase (14 per cent) their allocations to US equities. This comes against a backdrop of increased bouts of volatility after the US administration’s tariff policy.

The research, conducted by Opinium between 13 and 24 June 2025, covered 200 IFAs via an online quantitative survey. The IFAs were from a range of firms including a national advisor, member of a network and subscriber to service providers. The firms' total assets range from £0-£1 billion+.

The survey reveals that IFAs are looking beyond the short-term volatility and remain confident in the long-term potential of US equities, signalling that US exceptionalism is far from over.

The appeal of US equities is still robust as clients’ current exposure remain stable, with 45 per cent currently allocating 10 to 25 per cent of their clients’ portfolios to US equities. Additionally, over a third said they are allocating more than 25 per cent to US equities, the survey reveals.

“While tariffs may have shifted trade dynamics, the strength of the US economy and its global influence remain intact. The volatility from the new tariffs has created some short-term noise, but markets knew this was coming and have largely priced this in,” Michael Browne, global investment strategist at Franklin Templeton Institute, said. “The majority of advisors we surveyed are looking beyond the volatility, encouraging their clients to hold or increase their position in US stocks. History shows us that the US often absorbs trade shocks and recovers quickly, thanks to its fundamental structural growth, continuous innovation, and strong corporate earnings."

However, a number of other wealth and asset managers, such as DWS, Edmond de Rothschild Asset Management, and Guinness Global Investors, pondering the fallout from US tariffs and shifts in equity markets since the early spring, have been opting for European over US equities. They believe that European equities still offer more opportunities. “There are basically three aspects arguing in favour of European stocks: first; the aspect of diversification, second, cheaper valuations, and third, the higher share of cyclical corporations in Europe,” Vincenzo Vedda, global chief investment officer at DWS, said in a note. See more more commentary here, here and here.

Impact of Liberation Day tariffs
The Liberation Day tariffs have had a significant impact on various markets, affecting trade flows, prices, and economic stability. This has influenced IFAs' approach to their clients’ asset allocation, with 60 cent changing their strategies in response to the impact of the tariffs, the Franklin Templeton survey shows.

Among these, 16 per cent have increased their global asset allocations to actively managed strategies, and a further 15 per cent have increased their allocation to alternative assets as a hedge against volatility. In addition, one in 10 have either moved assets into defensive or lower-risk holdings or have rebalanced portfolios to reduce exposure to tariff-affected sectors. Despite short-term allocation changes in early-stage flow data, Franklin Templeton’s research shows that IFAs are staying put.

“Among US equities, some of the biggest opportunities are expected in the industrials, utilities and healthcare sectors, particularly through the construction of new manufacturing facilities and the procurement of energy to operate them,” Shep Perkins, CIO, Putnam Investments, said. “While traditional manufacturing sectors such as automotive often dominate the headlines, the strategic focus is increasingly on industries such as AI, semiconductors, biopharma (including vaccines) and critical minerals. These sectors are seen as critical to national security and economic competitiveness, as opposed to the less strategic consumer goods industries.”

Market diversification and sector preferences 
Given the recent domination of the “Magnificent Seven” in US equities, a third of IFAs are now seeking broader diversification through increased allocation to other sectors. Over the next six months, half of IFAs agree that the US equity rally will broaden beyond mega-cap tech. Small and mid-cap sectors could benefit from the market broadening with over two fifths suggesting that they could outperform mega-caps in the second half of 2025.

Volatility drivers
Over the next year, it is evident that geopolitical factors will continue to play a significant role in shaping market dynamics with just over half (51 per cent) of IFAs saying that US President Donald Trump's administration policies and decision-making are likely to drive the greatest level of US equity market volatility. Similarly, over two fifths (41 per cent) believe that volatility will be driven by the resulting shifts in US economic policy, such as changes in trade or tariffs. However, around one in 10 (12 per cent) of IFAs adopt a more optimistic outlook, suggesting that not all factors will significantly impact US equity market volatility over the next 12 months.