As we move into 2025, Fabiana Fedeli, CIO Equities, Multi Asset and Sustainability, suggests the Trump trade – investing in stocks that might benefit from the his policies – is likely to remain the focus of many investors. In her view, expectations of less regulation and lower taxes are positive for the immediate US macroeconomic picture but not for the longer-term fiscal picture. A major concern among some investors is that Trump’s policies may accelerate the US’s growing deficit.
High import tariffs would have a negative effect on the US economy, in particular, on inflation by making imported goods more expensive. Any inflationary impact from Trump’s policies could change the trajectory of the Fed’s decision making.
There is plenty of debate about how Trump’s second administration will pan out but, in reality, only time will tell how many of the proposed policies will be implemented – and to what extent.
Selective opportunities in Europe and Asia
While robust growth and Trump policy expectations could see the US equity market outperform again in 2025, Fabiana believes there are compelling bottom-up stock-specific opportunities in other markets, such as Europe and Asia.
In Europe, she points to opportunities in more economically-sensitive areas such as chemicals and materials. Banks are another potentially interesting area. Investor caution towards Chinese equities, due to concerns about the risk of US tariffs and China’s domestic economy, is creating interesting stockpicking opportunities for bottom-up investors.
As investors navigate the impact of Trump’s policies, elevated valuations and the broadening of returns beyond the technology sector, the key issue for 2025 will be finding the areas that could offer the best returns and selection will be essential in generating superior portfolio returns.
Private market growth trends look set to continue
Investor interest in private markets, or alternatives, has been growing in recent years and Emmanuel Deblanc, CIO Private Markets, believes this trend look set to continue in 2025. Institutional investors are progressively allocating away from public markets towards private assets. Meanwhile, new vehicles are being introduced to allow non-institutional investors to gain access to the asset class, opening up private market investments to a wider investor base.
