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Commodities: Global Growth and Energy Transition Will Be the Pillars Against Headwinds

Commodities y transición energética — Pixabay CC0 Public Domain

After Trump’s victory late last year, commodities began to weaken. Even gold, which had an exceptional year, started losing value as the dollar strengthened. These turbulences in the last quarter of 2024 have filled investment firms’ outlooks for commodities with both light and shadow, and, above all, with highly diverse interpretations.

For example, Bank of America expects commodity prices, including oil, to decline. According to Francisco Blanch, Head of Commodities and Derivatives Research, the demand growth for commodities will weaken: “Macroeconomic fundamentals suggest that in 2025, markets will be oversupplied with oil and grains but more balanced in the case of metals. After facing headwinds early in the year, gold should reach a high of $3,000 per ounce.”

In its outlook, the institution explains that the risks of a global trade war, combined with a strong U.S. dollar and higher terminal rates, create a bearish scenario for commodity returns. “Fundamentals point to lower prices for oil, grains, and metals in the first half of 2025, but the outlook could improve with stimulus in China or trade agreements. Negative macroeconomic shocks (tariffs, higher rates) or positive ones (trade, fiscal, or peace agreements) could increase correlations between asset classes in 2025,” Bank of America emphasizes.

Ofi Invest, for its part, believes that the roughly 10% correction in industrial and precious metal prices following Trump’s victory was a one-off event caused by a strong dollar. Despite this “setback,” it considers that nothing has changed the medium-term structural drivers for metals: the energy transition and high levels of debt. The asset manager believes that these two trends will once again support rising metal prices, given the structural imbalances in both supply and demand.

“The short-term rebound in the dollar is not the most relevant factor for gold. Debt issues and the emerging distrust in the dollar are structural and persistent problems that have a greater impact on gold prices. Additionally, the price of metals will benefit from shifts in consumption due to the energy and digital transition. In short, the structural drivers of metals, led by the energy and digital transitions, should soon support rising metal prices, given the current supply and demand imbalances,” explains Ofi Invest.

On the other hand, Macquarie holds that, given its economists’ global GDP growth forecast of 3% for 2025, with sequential acceleration in the first half, commodity prices should find some support against the current headwind of a strong U.S. dollar. That said, they note that the prospect of a stronger tailwind, with a notable acceleration in global industrial production, has diminished. “In fact, the negative implications for goods demand from a trade war threaten the recovery potential for manufacturing relative to services. The possibility that commodity demand will receive a boost from manufacturing restocking in developed markets is also limited by the negative confidence impact of a trade war and by our reduced expectations for Federal Reserve rate cuts,” they explain.

Headwinds

According to Macquarie’s outlook, in their baseline scenario, the incremental implementation of both U.S. tariffs and Chinese policy easing will likely result in comparatively slow price action. “Without something to drive real demand growth or a narrative to reinvigorate financial flows, fundamentally oversupplied markets will likely see most prices trend downward over the next 18 months, interspersed with headline-driven volatility and the possibility of regional mismatches,” they explain.

Additionally, they warn of a wide range of associated risks, heavily dependent on whether any trade agreements are reached. In their outlook document, they indicate that the most volatile alternative scenario would undoubtedly be one in which the incoming Trump administration adopts a maximalist approach to tariff implementation. This could lead to increased financial risk and real demand destruction for industrial commodities, only to be followed by a much more robust and likely commodity-intensive stimulus package from the Chinese government.

Growth Trends

“Apart from cyclical uncertainties, the pace of the energy transition remains the key factor we expect to determine global final demand growth trends. Given the absence of commodity demand growth from the ‘old economy’ in developed markets over the last two decades, we remain skeptical about its potential as a future growth driver. Furthermore, the argument that the energy transition is already being perceived as a demand differentiator is underscored by the assessment that global electric vehicle (EV) production should account for approximately 40% of net copper demand growth in 2024. At the same time, strong EV sales in China should mean that fleet penetration rates are now sufficient for refined oil demand for road transportation in the country to have peaked,” adds Macquarie.

Their conclusion is that not only will the pace of these developments vary over time, but the degree to which financial markets price them in will likely exacerbate these changes. “In light of this, as well as the reflexivity of commodity markets, periods of excessive price strength will likely offset the potential for future fundamental tightening by incentivizing primary and secondary supply growth, as well as demand destruction. Conversely, any period of excessive price weakness—such as from a trade war—will add to the potential for medium-term shortages,” concludes Macquarie’s outlook document.

From Bonds to Equities: Five Investment Themes for 2025

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Temas de inversión en 2025 — Pixabay CC0 Public Domain

As we enter 2025, it is crucial to reflect on the events of the past year and prepare for the challenges and opportunities ahead. At the end of 2024, the investment leaders of Neuberger Berman gathered to analyze the evolving investment environment and identify the themes they consider essential for the next twelve months. As a result of this exercise, the investment firm highlights five key themes.

A Year of Above-Trend Growth

Although policies may change, industrial strategies aimed at influencing domestic production patterns will continue, whether through government spending and investment, fiscal policy, trade policy, deregulation, or other means, according to Neuberger Berman. “If inflation can remain contained—and we believe it is possible—central banks could stay on the sidelines and allow economies to operate at a slightly faster pace. This scenario suggests above-trend U.S. GDP growth, which could pull other global economies along. The implications for debt and deficits, as well as the efficient allocation of capital, could surprise investors by proving to be manageable concerns in 2025,” the experts highlight.

Extending the Soft Landing with Real Income Growth

The negative impact of high inflation on lower-income consumers and small businesses has been a key factor in this year’s political uncertainty. According to the firm, countries and governments that achieve moderate inflation and greater participation in real wage and income growth will define success, reflected in data such as higher consumer confidence, improved political approval ratings, and GDP growth rates. “While it remains to be seen whether certain policy combinations can achieve this, we see evidence that the new U.S. administration at least recognizes this goal, and active industrial policies are proof of a growing recognition in other regions,” the experts emphasize.Setting the Stage for Broader Equity Market Performance

Deregulation, business-friendly policies, moderate inflation, and lower rates could allow for broader earnings growth and price performance, according to Neuberger Berman. “At the same time, the growth rates of large technology companies are likely to slow and normalize as capital expenditures increase. Value stocks, small-cap stocks, and sectors such as financials and industrials could start to regain ground against large tech companies. Non-U.S. markets could perform more strongly due to higher global growth and lower commodity prices. Relative valuations, along with fundamentals, should support this trend,” the experts note.

Bond Markets to Focus on Fiscal Policy Over Monetary Policy

“For more than two years, bond markets have been dominated by inflation data and central bank responses. We believe that in 2025, a reacceleration of inflation can be avoided, and central banks will settle into the more predictable routine of debating the level of the neutral rate,” Neuberger Berman states.

Bond investors are likely to shift their focus toward growth prospects for most of 2025, and possibly toward deficits and the issue of the term premium by the end of the year and into 2026, according to the firm’s experts. The result will be a moderate steepening of yield curves and a migration of bond market volatility from the short end of the curve to the intermediate and long ends.

A Boom in Mergers and Acquisitions

“Several factors are converging to unleash a pent-up wave of corporate deals: above-trend growth, optimistic valuations in public equity markets, a more stable outlook on inflation and central bank policies, the return of banks to the leveraged loan market, declining interest rates, and tighter credit spreads. Perhaps most importantly, a shift in the regulatory approach in the U.S. is anticipated,” the firm highlights.

That said, secondary private equity markets and co-investments will continue to thrive, as liquidity is still required to manage a large backlog of mature investments. However, raising new primary funds will remain a challenge. Event-driven hedge fund strategies will benefit from a large set of new opportunities, the experts conclude.

Vanguard Announces a New Actively Managed Fixed-Income ETF

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Vanguard and actively managed ETF — Pixabay CC0 Public Domain

Vanguard Will Expand Its Fixed-Income Offering with the Launch of the Vanguard Short Duration Bond ETF (VSDB), an Actively Managed Fixed-Income ETF to Be Managed by Vanguard’s Fixed-Income Group.

“The Vanguard Short Duration Bond ETF adds to our growing lineup of actively managed fixed-income ETFs and offers investors the opportunity to outperform the market in their short-term fixed-income allocations,” said Dan Reyes, Head of Vanguard’s Portfolio Review Department.

The firm plans to launch this ETF in early April of this year, and it will offer diversified exposure, primarily to short-term U.S. investment-grade bonds, including some exposure to structured products such as asset-backed securities.

The ETF is designed “to provide clients with current income and lower price volatility, consistent with short-duration bonds,” according to the statement.

Additionally, it will have the flexibility to invest in below-investment-grade debt and emerging markets to seek additional yield.

“This multi-sector approach aligns with investors’ preferences within their short-term fixed-income allocations and allows Vanguard’s fixed-income group to leverage the best ideas within a broad investable universe. The VSDB will have an estimated expense ratio of 0.15%,” the manager’s statement adds.

The ETF will be actively managed, enabling portfolio managers to seek the best opportunities within their investment universe while always maintaining a highly risk-aware approach, the information concludes.

Trump Pledges to Reclaim the Panama Canal, Prioritize Oil, and Revive Manufacturing

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Trump and Panama Canal — Wikimedia CommonsOfficial photo of the inauguration of the 47th presidency of the United States led by Donald Trump.

Donald Trump officially assumed office on Monday as the 47th President of the United States. In a robust inaugural address, he outlined policies aimed at making Americans “proud of their country,” while advocating for the oil industry, national manufacturing, and the reclamation of the Panama Canal.

“We will drill, baby, drill”

In a pointed critique of the Biden administration’s legacy, Trump declared the “Green New Deal” dead. He strongly criticized Democratic environmental policies and staunchly defended U.S. oil drilling (fracking) as a means to lower energy prices, which he claims have fueled inflation.

“America will be a manufacturing nation, and we have more oil than any other country. Prices will drop, our strategic reserves are at maximum capacity, and we will export to nations around the world,” Trump announced.

The president emphasized the importance of capitalizing on America’s “liquid gold,” stating that fracking would be a cornerstone of his productive strategy. “We’re going to drill, baby, drill,” he exclaimed.

The U.S. Will Be a Manufacturing Nation Again

Trump outlined plans for his administration to tackle rising prices, with his new cabinet focused on controlling inflation.

In terms of production, the president, now beginning his second non-consecutive term, reiterated his commitment to making the U.S. “a nation of domestic manufacturing” once again, particularly in the automotive and fossil fuel sectors.

On trade, Trump revisited a key theme from his first term—tariffs.

“Immediately, I will begin reforming our trade system. Instead of using our taxes to enrich other countries, we will use the taxes of other countries to enrich our own nation,” he stated.

On the Panama Canal: “China Is Operating It”

Trump also announced his intention to reclaim the Panama Canal, which he claimed is currently being operated by China.

“American ships are being grossly overcharged and unfairly treated in every way, shape, and form. This includes the U.S. Navy. And above all, China is operating the Panama Canal. We didn’t give it to China. We gave it to Panama, and we’re going to take it back,” Trump declared.

Defense, Security, and Gender Policies

The new president also addressed immigration, defense, national security, and gender-related policies.

Trump began by emphasizing national security, declaring a “national emergency” at the southern border effective immediately.

He announced an immediate halt to illegal border crossings and outlined plans to deport undocumented immigrants. “We will put an end to the practice of catch and release. We will stop the dangerous invasion that has plagued our country,” he stated.

Additionally, Trump labeled drug cartels as international terrorist organizations.

“We will eliminate the presence of gangs and criminals in our major cities and heartlands. As Commander-in-Chief, it is my duty to defend our country, and that’s exactly what we will do,” he said.

These measures had immediate consequences at the border, including the suspension of asylum applications through the CBP One system, which had facilitated asylum requests in the U.S.

On national defense, Trump vowed to restore pride in the Armed Forces and announced that the American flag would one day be planted on Mars.

Regarding gender policies, Trump took a firm stance against diversity initiatives, declaring that under his administration, there would be “only two genders: male and female.”

Inauguration Ceremony

The swearing-in ceremony at the Capitol was attended by former presidents Bill Clinton, George W. Bush, and Barack Obama, as well as outgoing president Joe Biden. Members of Trump’s family and inner circle were also present.

Jose Luis Blázquez Vilés Founds the Wealthtech ALVUS

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José Luis Blázquez Viles and Alvus — Photo courtesy

José Luis Blázquez Vilés has founded ALVUS Wealth Tech Wisdom, a SaaS (Software as a Service) platform designed to provide technological services for aggregating, monitoring, and managing the wealth of unregulated entities such as single family offices, religious congregations, associations, or foundations in Spain and Latin America. ALVUS currently serves single family offices in Spain, Peru, and Panama.

Most clients of this type rely on Excel-based processes. ALVUS aims to help them optimize these processes by reducing costs and increasing profitability and productivity. For example, single family offices can automatically integrate any type of asset—liquid or illiquid, active or passive—from any financial entity or jurisdiction. The platform offers global or partial reports, document management, automated accounting, tax reporting, document archiving, among other services. Additionally, ALVUS provides tools for cost control with financial entities, risk management, and asset recurrence control, including a “look through” of the total wealth of families or individuals by entity or overall.

ALVUS is a fully independent company, unaffiliated with any financial entity, and boasts over 200 connections with custodial banks and asset managers. Eighty IT professionals support the project.

ALVUS is part of a platform that already provides services to regulated entities in Spain (under CNMV) and Latin America (regulated by local market authorities). ALVUS clients benefit from the expertise and reliability of this platform, which serves securities and brokerage firms, banks, investment firms, fund managers, and more, without depending on external wealth management or advisory services.

Blázquez was the founder of Beka Values Private Banking (now Beka Finance Private Banking) and the creator of the ACUA Private Banking Project. He was also the Director of the External Advisors and Managers Model for Spain and Latin America at Andbank. He has held roles at Inversis Banco, including Director of the Independent Financial Advisors Network and Business Development, and served as Director of Asset Management for Spain and Portugal at Dresdner Bank. Other roles include positions at Renta 4, Dresdner Kleinwort, CECA London, Garban Europe London, and Renta 4 Securities Company.

Blázquez holds a degree in Business Administration with a specialization in Quantitative Methods from the Autonomous University of Madrid. He has obtained multiple postgraduate qualifications, including a Master’s in Financial Markets (Autonomous University of Madrid), a Master’s in e-Business (Instituto de Empresa), an Executive MBA (ESADE), a Management Development Program (IESE), a Fintech Program (ESADE), and a Derivatives Program (INSEAD). Additionally, he holds certifications such as Chartered Financial Technician (CFTe) and EFPA.

La Française Real Estate Managers Expands Its Investment Team with the Appointment of Astrid Bonduelle

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La Française and Astrid Bonduelle — Photo courtesy

La Française Real Estate Managers (REM), the real estate asset management company of Groupe La Française, has announced the appointment of Astrid Bonduelle as Investment Director within the healthcare real estate division.

In her new role, Astrid Bonduelle will be responsible for analyzing and evaluating real estate investment opportunities in the healthcare sector. She will report to Jérôme Valade, Director of the Healthcare Real Estate Sector at La Française REM.

Valade stated that over the past three years, and in the current economic context, “healthcare real estate assets have demonstrated their defensive role. Driven by an aging population and the consequent increase in healthcare needs, these investments benefit from sustained demand and can withstand economic fluctuations to some extent. Astrid will contribute to the development of this strategic sector for La Française REM.”

Bonduelle brings to La Française Real Estate Managers extensive experience in the real estate value chain. She began her career in 2020 at Groupama Gan REIM as an investment analyst, where she also supported the management of real estate portfolios. She later joined the real estate management company Euryale, where she honed her investment skills by sourcing, analyzing, and conducting due diligence on acquisition opportunities in the pan-European healthcare real estate sector.

Astrid Bonduelle holds a master’s degree in Real Estate Management from Paris Dauphine University.

Pension Funds Increase Allocations to Private Markets and Global Equities

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Pension funds and private markets — Pixabay CC0 Public Domain

According to the Schroders Global Investment Outlook Survey, which interviewed 420 pension fund leaders from 26 regions worldwide representing $13.4 trillion in assets, pension funds globally are planning to increase their allocations to private markets and global equities. Specifically, the study reveals that over 94% of these funds have already invested or plan to invest in private markets, with 27% intending to do so within the next two years.

An interesting finding is that pension funds are particularly focused on private debt strategies (51%), private equity (49%), infrastructure debt (41%), and renewable infrastructure (38%). Additionally, energy transition and decarbonization, as well as the technological revolution, are key themes driving pension fund demand in private markets. Approximately 93% of funds already invest or plan to invest in energy transition, and over a third expect to make new investments in this area within the next 1-2 years.

Demand for global equities is similarly high, with 55% of funds planning to increase their allocations to gain exposure to high-growth markets and sectors. “This trend highlights a strategic shift toward global active management,” the report notes.

Nearly three-quarters (70%) of global pension funds agree that active managers are better suited to provide specialized investment approaches focused on specific sectors, regions, or investment styles. This aligns with the belief that active managers possess the expertise needed to outperform passive products in the current environment, as noted by 59% of respondents.

Alternative fixed-income strategies are also popular, though preferences vary by region: in Asia-Pacific, asset-backed securities (36%) draw significant attention; in EMEA (excluding the UK), pension funds favor sustainable bonds (27%); in the UK and North America, opportunities lie in emerging market debt strategies (27%).

“This study highlights a fundamental shift in pension fund investment strategies, driven by the desire to access high-growth markets and sectors, alongside the need to enhance simplicity and adaptability. In an economic landscape marked by persistent inflation and volatility, we’re witnessing a strategic pivot toward active management, where pension funds recognize the potential of skilled managers to add alpha through allocation flexibility,” said Leonardo Fernández, Managing Director for Iberia at Schroders.

He emphasized that pension funds are increasing their global equity allocations because it allows them to capture growth across diverse regions and sectors while providing the flexibility to dynamically adjust allocations in response to changing market conditions. For pension funds, fixed income remains a core pillar.

Fernández also highlighted the report’s regional findings, which underscore local economic and regulatory differences and varying levels of investor maturity. “Understanding these nuances enables us to better align portfolios with both global opportunities and regional specifics, effectively addressing our clients’ changing needs.”

“Private markets are key for pension funds as they offer crucial means to diversify and enhance portfolio resilience. Sectors like private equity and renewable infrastructure are particularly well-positioned for growth, driven by key trends such as the energy transition and technological innovation. As the interest rate environment evolves, the need for skilled managers to identify and manage these assets intensifies,” Fernández explained.

Elon Musk, Monetary Policy, and ‘Trumpism’: The Shadows That Raise Doubts About the New Trump Administration

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As Donald Trump’s inauguration as U.S. president approaches, tensions are rising, fueled by both his actions and the broader uncertainties surrounding his administration. Since December 16, 2024, the S&P 500 has lost more than 3% as of January 2, 2025, while Tesla’s stock has dropped 18% after surging over 80% between the presidential election and December 16. Experts warn that Trump’s return to office will likely bring heightened market volatility.

In the days leading up to his swearing-in, Trump has already escalated tensions with threatening statements. “On Monday, following a media report, he vehemently denied any intention of softening his protectionist policies. Yesterday, he lashed out at Canada, Mexico, and Panama, threatening tariffs and even suggesting these countries should be part of the U.S. He also proposed renaming the Gulf of Mexico as the Gulf of America. As during his first term, we must again brace for potentially destabilizing comments,” said Sebastian Paris Horvitz, Director of Analysis at LBP AM, the majority shareholder of LFDE.

Rising Concerns and Market Volatility

Experts agree that Trump’s rhetoric and policies will inject volatility into markets. According to Portocolom, uncertainties about the new administration’s impact raise questions in areas like climate regulation and social cohesion. “During his previous term, significant rollbacks were observed in climate regulations, such as the withdrawal from the Paris Agreement, and a decline in social cohesion due to polarizing policies. These precedents spark concern about the potential influence in these areas again,” they noted.

Gilles Möec, Chief Economist at AXA IM, warned that markets should prepare for significant fiscal volatility in 2025, characterized by political wrangling and limited clarity. Möec highlighted that the “transformation rate” of Trump’s campaign promises into actual legislation is crucial for global macroeconomic and financial prospects in 2025.

“There is a strong belief among investors that the new U.S. administration will follow an ‘error correction’ approach with the market as the ‘judge.’ If U.S. equity markets react negatively to the implementation of some of Trump’s more business-adverse ideas, such as mass deportations or crippling tariffs, it’s likely policies would be recalibrated. This aligns with a low ‘transformation rate,’” Möec explained.

Monetary Policy

Alexis Bienvenu, fund manager at La Financière de l’Echiquier (LFDE), highlighted mistrust toward Trump’s administration, citing concerns over Elon Musk’s controversial inclusion and a less accommodative monetary policy.

According to Bienvenu, the disenchantment stems not only from Trump’s economic policies but also from the Federal Reserve’s less expansive stance. “The Fed cut its benchmark rate by 25 basis points at its December 18 meeting but accompanied this move with a cautious message regarding further cuts, now projecting only two more by the end of 2025. Far from suggesting a swift normalization toward its long-term target, the Fed sees the rate at about 3.9% by late 2025, partly due to higher inflation forecasts compared to the September meeting. The market’s reaction could only be negative,” he explained.

Bienvenu questioned why inflation projections were revised upward when recent data does not indicate a particularly damaging inflationary outlook for 2025. Contributing factors, such as moderation in housing prices, easing in the labor market, and stable oil prices, should help contain inflation. He speculated that these revisions might partly reflect expectations around Trump’s future economic policies.

Challenges Within Trumpism

Eoin Walsh, portfolio management partner at TwentyFour AM (Vontobel boutique), noted the difficulty of distinguishing rhetoric from policy in Trump’s administration but warned of significant potential impacts from proposed measures like tax cuts, immigration restrictions, deregulation, and tariffs.

Walsh believes that as Trump’s policies become clearer and new data on inflation and unemployment emerges, markets will begin pricing terminal base rates for this cycle. “We expect this will help normalize the curve and push 10-year Treasury yields back above base rates. Ultimately, while we don’t anticipate a sustained Treasury rally in 2025, we foresee more volatility, with yields likely ranging from lows below 4% to highs near 5%,” he concluded.

Deep Divisions

Bienvenu also pointed to internal divisions within Trump’s camp as a source of market concern. “The first episode of this tension occurred on December 19 when the Republican-majority House rejected a Trump budget proposal directly influenced by Musk. This nearly caused a federal government shutdown. While a modified version was passed at the last minute, significant concessions on Musk-inspired elements left the divide within the party unresolved,” he explained.

The clash resurfaced around immigration policies, with some Trump allies pushing to ban H-1B visas, prompting Musk to vow to protect them, citing their importance to innovation. Meanwhile, Steve Bannon, a staunch Trump ally recently released from prison, lashed out at Musk, suggesting he “sit at the back of the class until he understands Trumpism.”

“These divisions could persist as Trump balances the interests of Silicon Valley billionaires with Midwestern rednecks. Crucial measures like budget votes could face stalemates, which the market will undoubtedly punish,” Bienvenu added, warning of further legislative battles aboard the “Tesla of Trumpism.”

New Platforms, Altcoins, and Legislation Will Drive the Growth of Crypto Assets in 2025

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Crypto growth in 2025 — Pixabay CC0 Public Domain

2024 was a year of transition for the cryptocurrency universe. According to Hashdex, this market went through a recovery cycle following a turbulent 2022 marked by bad actors and fraudulent activities. Reflecting on the past year, they believe crypto assets experienced a recovery phase and the beginning of a bull market. A key turning point was the U.S. election results and Donald Trump’s victory. Evidence of this is the Nasdaq Crypto Index, which has risen more than 57% since November 5, 2024, driven by widespread optimism about the future direction of U.S. digital asset policies.

“We believe the current investment case for bitcoin and other crypto assets remains strong. The steady demand from institutional investors, advancements in infrastructure, and a regulatory environment set to improve significantly in 2025 are positioning this asset class for what could be its strongest year on record,” said Samir Kerbage, CIO of Hashdex. In his opinion, crypto assets tend to follow a cycle of four years that includes a bullish phase lasting approximately 12 months, followed by a bear market lasting one year, and then a recovery period spanning two years. In the last two bull markets, altcoins (that is, everything except bitcoin) have significantly outperformed the largest crypto asset, according to Hashdex.

“I believe we have entered a bull market, reinforced by the macroeconomic environment and the U.S. election results. But another indicator of a bull market is the superior performance of the Nasdaq Crypto Index compared to bitcoin. Over the past three months, the index has outperformed bitcoin (78% vs. 76.5%) and, since the elections, the Nasdaq Crypto Index has outpaced bitcoin by 6.8%,” added Kerbage.

2024 was a year of transition for the cryptocurrency universe. According to Hashdex, this market went through a recovery cycle following a turbulent 2022 marked by bad actors and fraudulent activities. Reflecting on the past year, they believe crypto assets experienced a recovery phase and the beginning of a bull market. A key turning point was the U.S. election results and Donald Trump’s victory. Evidence of this is the Nasdaq Crypto Index, which has risen more than 57% since November 5, 2024, driven by widespread optimism about the future direction of U.S. digital asset policies.

A key area, according to the entity, is smart contract projects—platforms that will enable users to conduct transactions involving not only information but also value and ownership. Hashdex estimates that these platforms and applications will outperform bitcoin over the next 12 to 18 months, as they compete for users and lay the foundation for decentralized applications.

“Thanks to the infrastructure developments we have seen in this area in recent years, new applications are emerging in fields such as artificial intelligence, video games, and many others as tokenization continues to expand. We also believe that new regulatory advances in 2025 will be more beneficial to these applications than to bitcoin specifically, given that bitcoin already has regulatory clarity and a well-developed capital market structure, with the growth of ETFs, options, and futures,” Kerbage explained.

In the U.S. and Europe, this legislative and regulatory clarity benefiting altcoins may include market structure legislation, as proposals like FIT21 aim to eliminate ambiguities regarding crypto assets’ status as commodities or securities, while creating registration pathways that could drive adoption in the U.S.

According to the latest report from Sygnum, a global banking group specializing in digital assets, relatively small institutional investor inflows into bitcoin ETFs could have a disproportionate impact on the market due to limited liquid supply. Their analysis of recent ETF flows suggests that every $1 billion inflow (approximately 0.1% of Bitcoin’s market cap) corresponds to price movements of 3-6%, with larger inflows showing greater price sensitivity.

The report predicts that this multiplier effect could be amplified if major institutional investors—including sovereign wealth funds, endowments, and pension funds—begin making allocations. Some U.S. state pension funds have already invested in crypto assets, and several states have introduced bills encouraging pension funds to consider cryptocurrency allocations. With the size of assets managed by these investors, even conservative estimates represent a larger wave of inflows than experienced in 2024 with the launch of spot cryptocurrency ETFs in the U.S.

“Many traditional institutional investors, those with the largest volumes of assets under management, are just beginning their foray into cryptocurrencies. Our analysis shows how even relatively modest allocations from this segment could fundamentally alter the crypto asset ecosystem. With greater regulatory clarity in the U.S. and the potential for Bitcoin to be recognized as a reserve asset for central banks, 2025 could mark a significant acceleration in institutional participation in crypto assets,” said Martin Burgherr, Chief Clients Officer of Sygnum Bank.

Stablecoin legislation, particularly the implementation of MiCA, will also play an important role by driving stablecoin adoption in the U.S. and Europe, expanding their use beyond emerging markets.

The repeal of SAB121, allowing U.S. banks to hold cryptocurrencies for their clients, is expected to enable banks and brokerages to expand their cryptocurrency trading and custody offerings, benefiting altcoins in particular. Additionally, new ETF launches under the new SEC chair are raising hopes for more approvals, including ETFs for indices and individual assets like Solana and XRP. Although uncertainty persists, the availability of new assets with ETFs as access points is highly positive.

Altcoin Use Cases

According to Kerbage, in addition to bitcoin evolving as an emerging digital store of value and smart contract platforms becoming a new way to exchange information, value, and ownership, three other altcoin use cases are expected to benefit over the next year:

DeFi: Projects aimed at creating an internet-based financial system, operating on smart contract platforms, will establish a new global capital markets infrastructure for payments. Stablecoins and tokenized money market funds are the first major use cases.
Web3: A new iteration of the internet that will enable users to own their data and make the web decentralized and more useful for innovations like AI agents and other advancements.
Digital Culture: An emerging digitally native generation will drive greater demand for owning digital assets and collectibles, with video games as the first natural application.

“If we compare cryptocurrencies to the internet, this industry is like the internet in the 1990s, and bitcoin could be compared to email—the only application most people have heard of. However, if we fast-forward 20 years, although email remains very useful, it has not been the internet application that has created the most value for society. We believe this perspective could apply to how bitcoin is currently perceived in relation to cryptocurrencies,” Kerbage concluded.

Investment in Iberia and Latin America: Much More Than a Common Language

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The investment world is defined by nuances that reflect local preferences, regulations, and the cultural characteristics of each region. Latin America is no exception, and operating in a market with such specific idiosyncrasies often means that clients of asset managers see the coordination between Iberia and Latam as an added value.

This brings significant advantages, as it allows for high-quality service with a strategic focus in the various countries where operations take place. Moreover, we hold a competitive edge over our European neighbors: a common language and a cultural connection that enable us to provide tailored service to meet each client’s needs.

However, when comparing the investment dynamics between Latin America and Iberia, clear differences emerge in both the nature of investors and the regulatory frameworks governing the markets.

Retail Preferences in Mexico, Brazil, and Beyond

In Mexico and Brazil, retail investors—including banks, independent advisors, and platforms—tend to favor local products with a conservative focus. In contrast, elsewhere in the region, as well as in Iberia, such investors predominantly opt for UCITs-compliant funds and ETFs.

Institutional Strength in Latin America

In the institutional segment, which includes insurers, pension plans, and family offices, Latin America stands out as one of the most advanced regions in the world. A prime example is the pension plans in countries like Chile and Mexico, where mandatory worker contributions have created a robust and sophisticated institutional ecosystem. In this ecosystem, pension funds play a fundamental role in asset management.

Regulation and Distribution: A Study in Contrasts

Regarding distribution, Latin America is characterized by the autonomy of its markets. Each country has its own regulations defining how financial products are distributed among investors. This heterogeneity contrasts with the uniformity in Spain and Portugal, where MiFID regulations unify financial market oversight across the European Union. While this facilitates cross-border operations, it may limit the personalization offered by the fragmented markets of Latin America.

Investment Preferences: Diverging Trends

Investor preferences, whether retail or institutional, also reflect these structural differences:

In US Offshore and South America, excluding Brazil, a significant portion of portfolios is allocated to U.S. assets, including fixed income, equities, mixed assets, and alternatives. There is also growing interest in diversifying beyond traditional funds into vehicles like ETFs or separately managed accounts (SMAs).

In Mexico and Brazil, the focus remains on local fixed income, supported by high interest rates, making this asset class a cornerstone of their portfolios.

Iberia’s Changing Landscape

In Iberia, the recent shift in European Central Bank monetary policy has influenced investor behavior. Investors are moving away from money market funds toward options offering greater added value, particularly in European fixed income, which now presents better prospects due to interest rate adjustments and inflation stabilization.

In equities, there is a trend toward diversification to reduce dependence on national indices often dominated by a few large companies. This strategy aims to mitigate risks associated with high concentration and improve returns by targeting sectors or regions less represented in traditional indices.

Investors are increasingly exploring active management strategies that prioritize companies with quality and value profiles. Simultaneously, thematic investments—such as technological transformation driven by digitalization and AI, or energy transition—are gaining traction. Additionally, emerging markets like India, often underrepresented in traditional portfolios, have captured the interest of Iberian investors due to their significant potential.

Shared Pathways and Future Opportunities

Despite their differences, Latin America and Iberia share a common path in fund management, as both regions lean toward products offering risk diversification and new sources of profitability. A shared vision can provide fertile ground for innovative investment strategies, supported by the commitment of global asset managers with strong local components. This approach enables the advancement of each country’s strategic plans.

Adapting to the specific characteristics of each market is crucial. Only in this way can asset managers in Spain deliver tailor-made services suited to the needs of clients on both sides of the Atlantic.

Authored by Javier Villegas, Head of Iberia & Latam at Franklin Templeton.