2025 Investment Outlook

Structural shifts, like artificial intelligence, are reshaping economies. We stay pro-risk and stay overweight to U.S. stocks as we see beneficiaries broadening.

Mega forces, like the rise of artificial intelligence (AI) and geopolitical fragmentation, are transforming economies. That means investors can no longer view the world in terms of business cycles or temporary deviations around stable long-term trends. Understanding the forces reshaping global economies can help investors identify unique opportunities.

Three investment themes for 2025: 

1.  Financing the future

2.  Rethinking investing

3.  Staying pro-risk

Financing the future:

Sizable capital will be needed as the rise of AI, the low-carbon transition and other mega forces drive a broad infrastructure buildout. With governments constrained by high public debt, capital markets will play a pivotal role in providing the funding needed. Private markets can offer exposure to broader sources of credit as well as to early-stage growth companies driving AI adoption.

Rethinking investing:

An ever-changing outlook calls for an ever-evolving portfolio. It calls into question many long-held investing principles, including the idea of a neutral benchmark portfolio like the traditional 60/40 portfolio mix of stocks and bonds. As mega forces reshape whole economies, we think investors should focus more on themes and less on broad asset classes. And with a wide range of possible outcomes, investors may wish to reassess portfolios more often.

Pro-risk:

We see the U.S. still standing out versus other developed markets thanks to stronger economic growth and its ability to capitalize on mega forces. We recognize some U.S. equity valuations look expensive but don’t think historical averages are necessarily a good guide amid a transformation.

The bottom line:

Moving into 2025, we think investors could benefit from viewing the world through the lens of transformation. We stay risk-on as we look for transformation beneficiaries. We think being more dynamic with portfolios and getting granular with views will both be essential.

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This material is intended for information purposes only, and does not constitute investment advice, a recommendation or an offer or solicitation to purchase or sell any securities to any person in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. This material may contain estimates and forward-looking statements, which may include forecasts and do not represent a guarantee of future performance. This information is not intended to be complete or exhaustive and no representations or warranties, either express or implied, are made regarding the accuracy or completeness of the information contained herein. The opinions expressed are as of January 14, 2025 and are subject to change without notice. Reliance upon information in this material is at the sole discretion of the reader. Investing involves risks.