Danske Bank Asset Management CIO Thomas Otbo.

Key takeaways

  • When market moves of this magnitude happen, we go into “risk management mode” to safeguard clients’ assets while capitalising on emerging opportunities.
  • Liberation Day was a stress test of our portfolios, and it confirmed the value of maintaining robust investment processes and risk management.
  • A more unpredictable US administration will increase risk premia on US assets, making diversification and flexibility even more important. 
  • Market dynamics continue to exert considerable influence on US policy decisions; when markets respond negatively, the probability of policy adjustments rises.

In April last year, Donald Trump announced global tariffs on what he referred to as “Liberation Day”, triggering significant market volatility. We asked Danske Bank Asset Management CIO Thomas Otbo how he experienced the event and what lessons it has offered for our investment strategy.

What was your immediate reaction, when Donald Trump announced his tariff scheme on Liberation Day last year?

“Our immediate reaction was to focus all our attention and resources on understanding the situation and implications for markets. When market moves of this magnitude happen, we automatically go into 'risk management mode'. Our primary focus is safeguarding our clients’ assets, but we also strive to capitalise on emerging opportunities presented by volatile market conditions. With such big moves, you really get a stress test of your investment processes and risk management approach. And while we were not positioned for the size of the move we saw, I am quite happy with how we managed the risk in our portfolios and how we subsequently performed during the rest of 2025.”

Have you made any changes to your investment strategy as a result of Liberation Day?

“We constantly strive to calibrate and optimise our processes, and Liberation Day did not prompt any major changes. Our investment processes were already designed to withstand significant market shocks, though recent events have further strengthened our preparedness. We operate in an increasingly volatile environment, and I believe that our risk management framework will continue to be tested in the years ahead. Put differently, we are not operating under the assumption that geopolitical uncertainty will fade anytime soon. The past several years – from a global pandemic and armed conflict in Europe to unrest in the Middle East – have reinforced the importance of maintaining robust investment processes capable of weathering unpredictable conditions.”

To what extent has your US exposure changed after Liberation Day?

“Our exposure to US assets varies considerably across different asset classes. For instance, our holdings in US fixed income are relatively modest, while our equity portfolios are heavily weighted toward US, mirroring the country’s significant presence in global equity markets. Our primary responsibility is not to intentionally reduce our US exposure; rather, we aim to find the best investment opportunities across regions and manage our clients’ investments in accordance with their preferences and the specific mandates they have given us. That said, over the past year, we have implemented higher‑than‑normal non‑US exposure in our tactical asset allocation, as we have found this attractive from a risk/reward perspective. Furthermore, we have taken deliberate steps to focus more on local opportunities in our investment offering – for example within Nordic venture and growth, European defense, and European structured credit.”

Has Liberation Day shaped your view on decisions coming from the US government, and how these decisions will affect markets?

“Events like Liberation Day – and a more unpredictable US administration – will, all else being equal, increase risk premia on US assets. However, recent developments in the Middle East highlight the importance of maintaining diversification and flexibility. US assets have generally outperformed other regions during this period. It is also important to remain humble and acknowledge that we cannot always predict the next market move. At present, we have reduced tactical risk to a minimum, as uncertainty is unusually high and the risk/reward therefore unattractive. We remain, however, close to the markets and ready to deploy risk when conditions improve.” 

Looking back a year, what (if anything) did the event mean for investors?

“One key takeaway has been that market dynamics continue to exert considerable influence on US policy decisions; notably, when the markets respond negatively, the probability of policy adjustments rises. Additionally, we've observed that market downturns can often create attractive long-term investment opportunities, even in periods marked by heightened uncertainty. During the second quarter of 2025, we increased our equity exposure within our tactical asset allocation. In retrospect, this proved to be a prudent move, as 2025 ultimately unfolded as a strong year for equity markets.”

Photo: Brendan Smialowski/AFP/Ritzau Scanpix.

This article is marketing communication and not investment advice. The publication has been prepared for information purposes only and it is not a recommendation, offer or solicitation of an offer to trade a financial instrument. Past performance is not a reliable indicator of future results that can be negative. Please consult with your professional advisors to ensure that you understand the risks before investing.