"The pigs are flying": where to find growth opportunities right now
Schroders' Sebastian Mullins believes the current market volatility means being active is more important than ever
There's an apocryphal Chinese curse that states, "may you live in interesting times".
The message: be careful what you wish for.
And that sentiment neatly captures how the markets have grappled with Trump's second term.
"It's been a very interesting ride," says Schroders Australia head of multi-asset Sebastian Mullins.
"The market went to price in all the positives of Trump - deregulation and tax cuts - and forgot for a while the more protectionist policies on immigration and tariffs," he said.
"That all changed after Liberation Day. We went from a very positive outlook to a very negative outlook. And the reason we're negative is because that tariff policy far exceeded anyone's expectations."
"We made the joke he didn't do tariffs in the first two days of office because his hand was tired from all the executive orders he had to sign. It didn't mean it wasn't coming. So we're positive on growth, but we thought the underlying market was positioned too aggressively in one way."
But while the turmoil has left many investors muddled, it's given active managers an opportunity to really prove their worth.
Invest anywhere, anyhow
"The market's moved from one extreme to the other in only a matter of months. To say being active is important again is an understatement. Getting your asset allocation right has been very important," said Mullins.
This is where multi-asset funds like the Schroder Real Return Active ETF (ASX: GROW) have a crucial role to play.
It offers the dual benefit of top-down asset allocation with bottom-up stock picking.
And that's what sets it apart from other equity-focused growth funds.
"We can go anywhere and invest in anything."
While Schroders' global teams find the best stocks to make up the bulk of GROW, the fund can then position elsewhere as needed.
This could mean adjusting country allocations and using options to protect against the market moving against them.
As Mullins jokes, "we're one tweet or one Truth Social post away from being wrong."
"We've developed our process to be dynamic and to adjust our views and portfolio based on changes in the market or based on news and the economy," he said.
It also means moving into a range of assets including gold, commodities and corporate bonds to provide diversification and allow investors to rebalance back into equities if the stock market tumbles.
2 high-conviction growth ideas
Mullins identifies two big investment ideas that are driving Schroders' thinking right now.
The first is being global ex-US equities.
While they remain short-term bullish on US stocks as momentum trades kick back in, longer-term he's looking to Europe and emerging markets.
He points to the P/E valuations of various markets as a bellwether for where the value is right now.
The US remains the most expensive market, far above historical averages, with Australia in second.
It's part of the reason they moved from being two standard deviations long on US equities at the start of the year (compared to the rest of the market), to now being two standard deviations short.
It's also why they're not really touching the ASX.
"The reason why more negative on Australia in particular, is not that there's not great companies you shouldn't buy, but on the index level it's very expensive," said Mullins.
"CBA has the same P/E ratio as Google. One has 20% margin, the other one makes some profit but otherwise is not as exciting a business model. Don't get angry with me."
According to data from AlphaSense, CBA grew income a mere 1% in 3Q25 but saw its share price reach record levels.
Instead, it's places like China, Germany and elsewhere in Europe presenting the opportunities.
"China, for example, has cut rates quite aggressively. That can stimulate [the economy] over the medium term and they actually have fiscal capacity to spend more," says Mullins.
"Germany has been very fiscally conservative. They're now increasing their fiscal spend by 3.5% of GDP on defence infrastructure and even tax cuts."
Even the more maligned parts of Europe are now looking attractive after making the most of the low rate environment during Covid.
"In the 2010s, you wouldn't want to touch the PIGS (Portugal Italy Greece Spain) with a 10-foot pole. Now the pigs are flying, they're doing really, really well."
The second thesis he likes is Australian corporate credit.
"There are parts of the Aussie credit market that are more attractive than the index," says Mullins.
This means high-yielding investment grade bonds - bank tier 2s or BBB corporates in utilities or infrastructure.
"We have an allocation to our actively-managed ETF HIGH on Cboe. They pick the best corporates in Australia in that space and you're getting yield close to 6% for a daily liquidity investment grade portfolio" he said.
How to sleep well at night
The recent market volatility has reinforced the value of professional fund management, according to Mullins.
Investors not wanting to blow themselves up in the chaos should lean on funds like GROW to avoid the bumps in the road.
"Leave the asset allocation to professionals," says Mullins. "It is difficult to do, but we've built our career, our profession, our process to effectively try and time markets. That's our job. So leave it to the professionals, we'll do the asset allocation for you."
"Average investors should focus on their overall asset allocation and leave the dynamism to the experts. You can sleep well at night."
Unlock potential to grow your wealth
By investing across a broad range of asset classes, GROW aims to achieve its return objectives with lower volatility of returns. Find out more by visiting the Schroders website or the fund profile below.
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Schroder Real Return (Managed Fund) (GROW)
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Tom is a Content Editor at Livewire Markets, having worked as a writer and editor for 10 years, specialising in investing and personal finance.
He has previously worked at Finder, FourFourTwo and Man Of Many covering everything from film to football.
He has a Masters in Media Production and a Bachelor's in Journalism.
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Tom is a Content Editor at Livewire Markets, having worked as a writer and editor for 10 years, specialising in investing and personal finance. He has previously worked at Finder, FourFourTwo and Man Of Many covering everything from film to...
Expertise
Tom is a Content Editor at Livewire Markets, having worked as a writer and editor for 10 years, specialising in investing and personal finance. He has previously worked at Finder, FourFourTwo and Man Of Many covering everything from film to...
Expertise
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