In the deglobalization era, resilient and profitable performers will thrive

Co-manager of STS Global Income and Growth Trust James Harries shares where he would invest his money and chooses his favorite stocks

One could call the current state of the world economy a "reverse Berlin Wall" moment. After the fall of the Iron Curtain, asset owners have profited from strong structural tailwinds for more than a generation. The global labor pool was increased, production costs were decreased, and inflation was stifled with the entry of Eastern Europe and, later, China into the economy.

Supported by the Pax Americana, the US-led international order, this change allowed governments to benefit from increased fiscal flexibility and the peace dividend. After the global financial crisis, it also facilitated the adoption of unconventional monetary policies like quantitative easing, which further boosted asset prices and caused a long-term drop in interest rates.

This has led to imbalances and social pressures, even though it may have been desirable from an economic perspective (maximizing economies' capacity to pursue their comparative advantage and businesses' cost base). Economic nationalism and populism have been fueled in part by these strains.

This change was typified by the ascent of President Donald Trump, whose administration defied established conventions in the fields of geopolitics, economics, and currency policy. The decline of long-standing alliances like NATO and a shift away from globalization toward protectionism and tariffs are two major areas of disruption.

Despite the retraction of some proposed tariffs, the global trend toward economic fragmentation and deglobalization has not changed. However, stock market values continue to be high, especially in the US. A measured and cautious approach to investing is necessary in light of this.

Throughout the entire market cycle, the STS Global Income & Growth Trust seeks to provide strong risk-adjusted returns. Our focus is on cash-generating, robust companies with steady earnings and solid balance sheets. In addition to generating steady and increasing income, this helps us protect capital during times of volatility. Here are three instances. .

Taking advantage of red tape.

One of the top providers of payroll, HR, and insurance services for small and medium-sized enterprises in the US is Paychex (Nasdaq: PAYX). There is a growing need for outsourced solutions due to increasingly complex regulations, which provides this company with plenty of room to expand both domestically and internationally. Since it earns interest on funds held for clients, the group also benefits from higher interest rates. Paychex supports robust and expanding dividends due to its low capital needs and high recurring revenues. It is a great investment for long-term worldwide income.

The Chicago Mercantile Exchange's owner, CME Group (Nasdaq: CME), gains a direct advantage from rising market volatility, the expanding use of futures and options to control portfolio risk, and the continuous expansion of the US Treasury market. Its deep liquidity pools and command over important derivatives contracts give it significant competitive advantages, placing it in a unique position in the uncertain world of today.

Amadeus IT Group (Madrid: AMS), a world leader in travel technology, provides hotel, airline, and travel agent booking platforms in addition to mission-critical IT services. High switching costs and network effects shield its dominant market position. Instead of being price-sensitive, the company is volume-driven, and we think the shares are cheap in comparison to their US-listed counterparts.