By BlackRock and PIMCO are advising clients to allocate up to 15% of portfolios to Japanese yen and Swiss franc assets as “tariff insurance” before November’s election.
Portfolio Construction:
| Asset | Recommended Weight | Rationale |
|---|---|---|
| Yen cash | 5% | Immediate liquidity during crises |
| Swiss gov bonds | 7% | Negative correlation to trade wars |
| JPY/CHF options | 3% | Cheap volatility protection |
“These positions returned 19% during 2018-2019 tariff spikes,” notes BlackRock’s CIO of Global Fixed Income. The strategy assumes:
- 10% US tariff implementation → 8% JPY appreciation
- EU retaliatory measures → CHF outperforms EUR by 5%
Risks:
- BOJ intervention cap at 145/USD
- SNB negative rate policy reversal