In a constantly changing economic environment, with rising geopolitical uncertainty, how can investors protect their wealth and generate meaningful long-term returns?
Our flagship annual Outlook event took place last week in the spectacular St George ballroom at The Peninsula London. Over the course of the evening, our clients heard from The Rt. Hon. Gordon Brown, who painted a compelling picture of a world undergoing profound shifts, and from our investment experts, who offered their insights and perspectives on financial markets and investment opportunities in 2025. Here we give a brief overview of the themes discussed.
Uncertainty – the only certainty in 2025
The evening began with Julien Lafargue, our Chief Market Strategist, setting out the macroeconomic scene and outlining the key themes of our Outlook 2025 report. Julien explained that although the world may feel more uncertain than before, this is because it has in fact become more predictable. This means that when surprises do occur, they often have a more dramatic impact on markets. With access to so much information today, we open ourselves up to more disappointment than before. However, as he reminded clients, “although there is much uncertainty and we might feel unsure about the future, the opportunity set we have as investors has perhaps never been bigger”.
This paved the way for a thought-provoking fireside chat with The Rt. Hon. Gordon Brown, Prime Minister of the United Kingdom from 2007 – 2010. Our clients were treated to some fascinating insights as Gordon shared his views on geopolitics and the shifting global landscape.
The unenviable task of following on from The Rt. Hon. Gordon Brown fell to our investment panel, for which Julien was joined by Will Hobbs, Head of UK Multi-Asset Wealth, and Mark Mills, Head of Investment Distribution, UK & Crown Dependencies.
The outlook for risk assets
So, given the uncertainty surrounding markets this year, what are the implications for investors?
One of the main areas of conversation was the US. With a new president, the possibility of tariffs and potential de-regulation, our investment experts agreed that this is the area with the most uncertainty. While markets responded positively following Trump’s election victory and have continued to be supportive in the new year, US equity valuations – and investor expectations – are elevated. Julien noted that, “Something we’re wary about is that when markets are positive and expectations are high, there is a greater chance of surprises on the downside.”
In contrast, our investment experts highlighted that a number of asset classes, such as Europe, China and Emerging Market Debt, have been largely ignored in recent years. European equities, for example, have been plagued by investor concerns around structural issues and political headwinds. Will Hobbs explained that it can be helpful to look at markets through the prism of what other people are worrying about, and that often opportunities can be found in areas of the market that have been overlooked.
Turning to the UK, the panel agreed that prospects were limited, but again opportunities could still be found. Julien explained, “The UK has underperformed compared to global markets over the last few years, but the good news is that expectations for the UK market are low.” However, as Will added, “The new government is facing bond markets called higher by a strong US economy. So far, the signs of a repeat of the 2022 mini-budget blow-out are substantially absent nonetheless, and the outlook for the UK economy is likely better than widely feared.”
Given this backdrop, our investment experts outlined their key considerations for portfolio positioning in 2025. As ever, diversification across asset classes, sectors and geographies is crucial to mitigating risks. Investing in high-quality companies with strong fundamentals and sustainable competitive advantages can provide a level of resilience in challenging market conditions. More defensive equity sectors may also help manage risk within portfolios.
To end the panel session, Will reminded clients that with increased uncertainty comes opportunity and that it is worth staying invested, saying, “Ultimately, you have to be in it to win it.”
Our thanks again to all those who attended and contributed to this memorable event.
