After reviewing the outlook published by international asset managers for 2025, we have extracted their key messages for the next twelve months. Undoubtedly, three ideas stand out: a clear emphasis on equities, the need to diversify and be selective, and staying invested in alternative assets. Managers agree that investors are at the starting point of a new investment paradigm: a shift toward a multipolar world, more proactive fiscal policies, and higher interest rates compared to the last decade.
BlackRock: AI and Geopolitical Fragmentation
“We have long stated that economies are transforming due to megaforces such as the rise of artificial intelligence (AI) and geopolitical fragmentation. This will likely result in greater performance dispersion between countries, sectors, and companies. Europe appears to benefit less from some long-term trends. Therefore, even with depressed valuations, we maintain a tactical underweight on Europe overall and prefer granular exposure to specific sectors and countries. We remain overweight in European high-yield debt and neutral on eurozone public and investment-grade debt,” BlackRock states.
Where does this leave them? According to BlackRock, they remain risk-positive. “We see the United States continuing to stand out among developed markets, thanks to stronger growth and its ability to better capitalize on megaforces. We are increasing our overweight position in U.S. equities and see the AI theme expanding. We don’t believe the high valuations of U.S. equities alone will trigger a short-term reassessment. However, we are ready to adjust if markets become overly exuberant. We underweight long-duration U.S. Treasury bonds both tactically and strategically and see risks to our optimistic outlook should long-term bond yields rise. Private markets are a vital way to allocate to megaforces, and we have become more positive about infrastructure in the strategic horizon,” they explain in their outlook document.
Fidelity International: Leveraging Divergences
According to Fidelity International’s 2025 Investment Outlook report, divergences in policies, economic evolution, and geopolitics present an attractive range of opportunities for market participants in 2025. For Niamh Brodie-Machura, co-head of investments in Equity at Fidelity International, macroeconomic and monetary policies should create a positive environment for equity markets heading into 2025. “The economic cycle will enter a new phase, but geopolitics will also resonate more strongly throughout the year. Trends we have observed suggest that recent price movements may have further to go, but new directions and expanded growth areas in markets should be expected. These are very exciting times for equity investors,” says Brodie-Machura.
When highlighting a specific region beyond the U.S., the Fidelity expert points to Japan: “We consider sentiment indicators and fundamentals to be favorable. The country continues on a reflationary path thanks to strong wage growth, while corporate investment and shareholder returns will steadily increase over time. The percentage of Topix companies outperforming the index has also risen, as investors search for beneficiaries of the country’s corporate governance reforms.”
Schroders: Equities and Private Markets
For Johanna Kyrklund, Chief Investment Officer of Schroders Group, the economic backdrop remains conducive to generating returns, but diversification will be essential to building resilient portfolios. “We believe there is potential for markets to revalue further in the U.S., especially given Trump’s focus on deregulation and corporate tax cuts. Consensus expectations point to improved earnings growth in most regions in 2025,” she argues.
Furthermore, Kyrklund states that divergent fiscal and monetary policies worldwide will also provide opportunities in fixed-income and currency markets, as well as noting that strong corporate balance sheets support credit market performance. “Private markets can also contribute to resilience through exposure to various asset types that tend to be more insulated from geopolitical events than listed equities or fixed income. Examples include real estate and infrastructure assets, which offer resilient long-term cash flows, or assets such as insurance-linked securities, where weather is the primary risk factor,” she adds.
Janus Henderson: The Impact of the Rate Cycle
According to Ali Dibadj, CEO of Janus Henderson, in the numerous conversations held with clients worldwide, one thing is clear: most expect increased market volatility in 2025 and beyond. “We share that view and acknowledge the complexity of positioning portfolios based on the macroeconomic factors shaping the world,” he notes. The firm sees the global economy remaining in the late-cycle phase, and any increase in risk-taking must be approached cautiously. “The increase in valuations of higher-risk assets following the U.S. elections reduces the margin for error. As global monetary policy diverges and the economic expansion affects sectors differently, investors must balance a security’s ability to benefit from the cycle extension with its valuation,” they comment.
In this regard, Adam Hetts, Global Head of Multi-Asset at Janus Henderson, believes in broadening exposure in a late-cycle economy. “Fed rate cuts and the resilience of the business sector have raised bond valuations, but within this space, high-yield issuance has the potential to provide additional carry and lower sensitivity to movements in a still-volatile interest rate market. Outside the U.S., economic and monetary policy divergences create opportunities. Europe, for instance, will likely have no choice but to maintain accommodative policy. However, higher U.S. rates and the resulting dollar strength would pose a challenge for emerging market issuers reliant on U.S. dollar financing,” he highlights regarding fixed income.
Allianz: More Risk Assets
Allianz GI also has a clear message for investors: “Our base case for the U.S. economy is a soft landing, where inflation slows, and a recession is avoided. This outcome benefits various risk assets, especially U.S. equities, which we still find attractive despite high valuations. “After the U.S. elections, the outlook for risk assets appears positive. A soft landing is expected for the global economy and, specifically, the U.S., even though volatility could increase. Risks remain, as markets have priced in a rate-cutting cycle that could be interrupted by an inflation resurgence. In our opinion, it is time for investors to rethink their portfolio composition, incorporating higher-risk and higher-return assets or adding investments in illiquid assets such as private debt or infrastructure. In the face of potential new trade conflicts, active management and caution will be key to adapting to a global economy where selectivity will be critical.”
Additionally, the firm emphasizes that investors could consider taking on more risk. “To do so, they could reallocate positions currently held in cash or low-risk money market funds. These positions could be directed toward ‘medium-risk’ opportunities in fixed income or private markets to balance higher-risk areas. Furthermore, private markets could be a key element for diversification at a time when European regulation seeks to boost retail investment flows into private debt and infrastructure,” they add.
Vanguard: Don’t Forget Fixed Income
According to Vanguard, the long-term outlook favors diversification, including fixed income. In their view, the greatest downside risk for bonds also applies to equities, i.e., an increase in long-term rates due to factors that could include continued fiscal deficit spending or the withdrawal of supply-side support.
For Vanguard, valuations in the U.S. are elevated but not as much as traditional metrics suggest. Despite higher interest rates, many large corporations have shielded themselves from a tighter monetary policy by securing low financing costs in advance. Most importantly, the market has increasingly concentrated on growth-oriented sectors such as technology, supporting higher valuations. International valuations are more attractive. This trend could continue as companies outside the U.S. may be more exposed to growing economic and political risks.
“The long-term attractiveness of bonds remains valid in the current interest rate environment. We believe long-term investors will continue to benefit from a diversified portfolio that combines fixed income and globally diversified equities,” concludes Joe Davis, Global Chief Economist and Global Head of Investment Strategy at Vanguard Group.
abrdn: Small Caps
The asset manager is now more positive about developed market equities, as strong earnings growth in the U.S. and the likely expansion of markets among winners in the technology and artificial intelligence sectors provide a solid basis for stock market performance.
“Looking ahead to 2025, there is great uncertainty about the exact characteristics of the upcoming political changes under Donald Trump’s presidency. There is a significant risk that the Trump administration will be far more disruptive than expected, both positively and negatively, in terms of economic and market outcomes. And there are scenarios where his political agenda proves even more favorable for growth and market confidence,” says Peter Branner, Chief Investment Officer of abrdn.
Additionally, he points to small caps: “The upcoming changes in U.S. policy create uncertainty but are likely to more clearly benefit U.S. companies, particularly small-cap companies. The Trump administration’s deregulation agenda will likely facilitate merger and acquisition activity by the Federal Trade Commission, while relaxing bank capital regulations and granting more energy exploration permits. Corporate tax cuts tend to benefit smaller companies more, whereas tariffs will disproportionately affect internationally exposed firms.”
For Marcelo Soba