The return of President Trump’s tariff throw is at the expected level, yet the market is fluctuating. This is likely related to the fact that the economy of our country has shifted to a contraction cycle since the second half of last year. The tariff and retaliatory tariff battle can only have an adverse effect on Korea, which is heavily dependent on exports. Kim Kyung-hoon, a researcher at DAOL Investment & Securities, noted, “The contraction trend is expected to continue at least until the first half of this year,” adding, “This could soon limit the upside of the domestic stock market.”
This means that the only hope this year lies in the U.S. stock market, but the problem is that the global tariff war is also increasing volatility in the U.S. market. On March 3 (local time), Tesla’s stock price plummeted by 5.17%. This was in the aftermath of former Canadian Finance Minister Chrystia Freeland’s assertion that "if the U.S. imposes a 25% tariff on Canadian products, it must impose a 100% retaliatory tariff on Tesla electric vehicles."
Such a power struggle and the resulting changes in stock prices will likely be repeated in the U.S. stock market for the time being. For investors who are solely focused on the U.S. stock market, this is an unwelcome development. However, if one is reluctant to return to an unattractive domestic stock market, what would be a rational choice?
Investment decisions are up to each individual, but in a climate like this, products that combine stocks and bonds, known as mixed bond funds, may serve as an alternative. In a rising market, there are benefits from the growth of individual stocks, and in a declining market, returns can be defended by safe assets like bonds. For instance, those who invested in Mirae Asset Global Investments' exchange-traded fund (ETF) called "TIGER Tesla Bond Mixed Fn" would have felt less pain on a day like today. This ETF invests 30% in Tesla stocks and the remaining 70% in domestic bonds, increasing its defensive strength against a declining market.
The 'ACE NVIDIA Bond Mixed Bloomberg' launched by Korea Investment Trust Management is an ETF that mixes U.S. NVIDIA stocks and bonds. As the retirement pension market is rapidly growing, such mixed products are useful even in retirement pension accounts where direct investment in overseas stocks is restricted. When confidence in a single stock wanes, mixing can be an effective strategy.