MW 7 stock picks from a global fund manager as markets 'enforce discipline' on Trump

By Philip van Doorn

Trump had to blink last week as he delayed tariffs, but Julian McManus still sees painful inflation over the short term

This year's remarkable increase in stock-market volatility underscores the importance of diversification. But even if you add exposure outside the U.S., it is a good idea to think about companies that are likely to weather economic storms as part of a "resilient" portfolio, according to Julian McManus of Janus Henderson Investors.

McManus co-manages the $3.3 billion Janus Henderson Overseas Fund JIGFX and the $2.7 billion Janus Henderson Global Select Fund JORFX. He is based in Denver and has been with the firm since 2004. Both funds are rated four stars (out of five) by Morningstar.

McManus told MarketWatch that over the past two weeks, he and colleagues had "learned markets will enforce discipline" and about "the Trump administration's pain threshold and what they are worried about."

President Donald Trump announced his set of "liberation day" tariffs on most countries on April 2 after the stock market closed. The S&P 500 SPX fell 12.1% over the next four trading sessions. Then, on April 9, Trump announced a 90-day hold on most new tariffs, aside from those on imports from China and the new tariffs on auto imports. The S&P 500 rose 9.5% that day.

The disruption in the bond market might have been a more important motivating factor for the Trump administration to temper its tariff policies. The yield on 10-year U.S. Treasury notes BX:TMUBMUSD10Y rose 48 basis points over the course of one week to 4.49% on Friday, which "suggested significant stress," according to McManus. When bond yields rise, it means their market prices have been falling and vice versa. Early Monday, the 10-year yield had declined to 4.43%.

"When the sheer level of tariffs being proposed - not just on China but pretty much the entire world that trades with the U.S. - became so egregious and the U.S. was trying to fight a trade war on every front, the markets literally rejected that view of the future," McManus said.

He added: "We also have learned that China was Trump's real target all along. It now seems like it was a strategic mistake trying to fight a trade war on all fronts at the same time."

Defensive stock selections

McManus described the Janus Henderson Overseas Fund and the firm's Global Select Fund as having similar strategies. He co-manages both with Christopher O'Malley. The Overseas Fund invests in companies outside the U.S., although a stock's primary listing might be in the U.S. The Global Fund includes U.S. stocks in its portfolio.

Regardless of how one might feel about Trump's trade policies and how they will stabilize, "in the short term, you will have a lot of inflation and it will be pervasive," McManus said.

McManus highlighted seven specific stocks. Three of them have subscription models that he believes "can power through a recession." These are Spotify Technology SA $(SPOT)$, Deutsche Telekom AG (XE:DTE) and T-Mobile US Inc. $(TMUS)$ . Deutsche Telekom owns 51.5% of T- Mobile's common shares, according to FactSet.

McManus also cited Liberty Media Corp. Series C Liberty Formula One $(FWONK)$ as a defensive stock, which, for simplicity's sake, we'll just call Formula One.

The company "has an extremely passionate viewer base and fan base that goes far beyond just watching the events," according to McManus. He said that Formula One's management had done "a fantastic job improving and building" the business so that racing teams that had formerly been losing money "are now changing hands for a billion dollars."

Formula One has a market capitalization of $17.2 billion. McManus described it as "one of the last remaining sports assets in public markets." He added it was likely that a company operating a streaming service, such as Netflix Inc. $(NFLX)$, Apple Inc. $(AAPL)$ or Amazon.com Inc. $(AMZN)$, would want to acquire Formula One.

McManus also listed two defense contractors he favors - BAE Systems PLC (UK:BA) and Rheinmetall AG (XE:RHM), which are obvious plays for European rearmament.

Read: Confidence in German economy surges as parliament approves huge spending plan

The seventh stock McManus named was BYD Co. Ltd (HK:1211). The company makes electric cars and hybrids. BYD delivered 1,524,270 vehicles during the fourth quarter, compared with 495,570 delivered by Tesla Inc. $(TSLA)$, according to data compiled by analysts at Cantor Fitzgerald Europe. In its home market of China, BYD has an obvious advantage over Tesla. But McManus is also enthusiastic about the company's push to sell more vehicles in Europe. BYD's new factory in Hungary is expected to come online in the second half of this year.

"Those are the types of businesses that give us the defense and form the core of the portfolio," McManus said. Then he said that "for offense" he favored European and Japanese banks, which he sees as "cheap, on any basis," well capitalized and "very well managed."

Here are the largest 10 holdings (out of 44) of the Janus Henderson Overseas Fund as of Feb. 28:

   Company                                           Ticker     Country          % of Janus Henderson Overseas Fund 
   Taiwan Semiconductor Manufacturing Co. Ltd.       TW:2330    Taiwan                                        6.69% 
   BAE Systems PLC                                   UK:BA      U.K.                                          4.33% 
   Liberty Media Corp. Series C Liberty Formula One  FWONK      United States                                 3.90% 
   Erste Group Bank AG                               AT:EBS     Austria                                       3.89% 
   Dai-ichi Life Holdings Inc.                       JP:8750    Japan                                         3.51% 
   Sanofi S.A.                                       FR:SAN     France                                        3.32% 
   Deutsche Telekom AG                               XE:DTE     Germany                                       3.21% 
   HDFC Bank Ltd.                                    IN:500180  India                                         3.09% 
   AstraZeneca PLC                                   UK:AZN     U.K.                                          3.03% 
   Resona Holdings Inc.                              JP:8308    Japan                                         3.02% 
                                                                                  Source: Janus Henderson Investors 

You might need to scroll the table to see all of the columns. If you are using a MarketWatch app on your phone, you might need to flip the screen to landscape to see the entire table.

Here are the largest 10 holdings (out of 53) of the Janus Henderson Global Select Fund as of Feb. 28:

   Company                                           Ticker     Country    % of Janus Henderson Global Select Fund 
   Taiwan Semiconductor Manufacturing Co. Ltd.       TW:2330    Taiwan                                       6.59% 
   Microsoft Corp.                                   MSFT       U.S.                                         4.55% 
   Nvidia Corp.                                      NVDA       U.S.                                         3.92% 
   Arthur J. Gallagher & Co.                         AJG        U.S.                                         3.91% 
   BAE Systems PLC                                   UK:BA      U.K.                                         3.89% 
   Liberty Media Corp. Series C Liberty Formula One  FWONK      U.S.                                         3.58% 
   Amazon.com Inc.                                   AMZN       U.S.                                         3.31% 
   TJX Cos. Inc.                                     TJX        U.S.                                         3.19% 
   Chipotle Mexican Grill Inc.                       CMG        U.S.                                         2.93% 
   Teck Resources Ltd. Class B                       CA:TECK.B  Canada                                       2.70% 
                                                                                 Source: Janus Henderson Investors 

Click on the tickers for more information about each company.

Read: Tomi Kilgore's detailed guide to the information available on the MarketWatch quote page

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-Philip van Doorn

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April 14, 2025 22:14 ET (02:14 GMT)

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