When you visit our website, information may be stored or recovered on your device, mainly in the form of cookies. We use essential cookies to ensure the website works as it should, and statistical and marketing cookies for audience measurement and content customisation purposes. We rely on Google to store your consent choices and manage the activation of cookies accordingly. For more information on this, please also refer to the Google policy on Business Data Responsibility.
From the Cookie Management Centre, you can set your preferences with respect to the use of cookies: accept or reject certain categories, accept all, or reject all. For detailed information on all cookies used across these three categories, please refer to our Cookie Policy.
Please note that blocking certain cookies may affect your experience and the services offered.
Essential cookies Always active
Essential cookies help the website to work as it should by enabling necessary functionalities, such as navigating between pages and accessing secure areas. These cannot be disabled in our systems.
Statistical cookies
Statistical cookies help us understand how visitors interact with our site by collecting and communicating browsing information. They make it possible to identify the most and least visited pages and to improve the overall performance of the site.
Marketing cookies
Marketing cookies are used to display relevant advertising and measure the performance of campaigns. If you choose not to allow these cookies, you will continue to see ads, but they will be less relevant to your interests.
Choose the purposes for which we may use Google products to collect and use your data:
User storage: to technically permit advertising functionality.
User data for advertising: to optimise our advertising campaigns.
Ad customisation: to tailor advertising to your interests.
In a year of divergence, three shifts in 2025 should favour active managers
Yannik Zufferey, PhD
Chief Investment Officer, Core Business
Florian Ielpo, PhD
Head of Macro
key takeaways.
In the past two years of low global growth, investment returns have been dominated by select mega- and large-cap tech stocks, gold, bitcoin and the US dollar
Now, improving global economic conditions and continued central-bank easing are disrupting these trends and supporting more balanced performance across asset classes, in our view
These dynamics underpin our base case for potential market returns in 2025 – and our conviction that this year of divergence is one of opportunity for active strategies.
For investors, the same tune was stuck on repeat for the past two years. Robust US growth contrasted with subdued output in Europe and China, fixed income was challenged as select mega and large-cap equities dominated gains as the US dollar, gold and bitcoin also enjoyed momentum. But as 2025 begins, we believe the tempo is changing. With the macroeconomic environment improving in the context of stark disparities in valuations among asset classes, a new regime for market returns could benefit active managers.
We see three potential shifts taking place:
1.
Improving macro conditions. Global growth is increasing and inflation easing, with the majority of developed economies expanding over the past year. With the majority of countries experiencing a slowdown over the past two years, 2025 could see a reversal of that trend. The sticky inflation witnessed across developed-market (DM) economies signals that anominal recovery is underway
2.
Monetary policy easing. The ongoing trend of monetary policy easing, led by major central banks such as the European Central Bank (ECB), is set to play a pivotal role in shaping economic landscapes throughout 2025. This accommodative stance is expected to support recoveries in both DM and emerging markets (EMs), fostering an environment conducive to investment and consumer spending
3.
Balanced market returns. Despite subdued economic activity, investors have increasingly favoured growth stocks, resulting in a pronounced concentration of market performance within US mega-cap technology stocks. This trend has created a stark disparity in the relative valuations of different asset classes – particularly between equities and bonds, as well as across EM and DM stocks.
These shifts collectively suggest that markets could revert to more regular patterns than those seen in the past three years, setting the stage for a significant reshuffling of investment strategies. In our view, a long-anticipated mean reversion – where the importance of beta diminishes and strategic alpha positioning distinguishes successful investments – may take place, which investors should prepare for. Still, challenges lie ahead:
The need for fiscal consolidation among heavily indebted governments will clash with populist tendencies for tax cuts or increased spending
The anticipated hike in US tariffs could disrupt world trade
High equity valuations and tight spreads could discourage investors from adding risk to their portfolios.
These are the risks to our base case for 2025, and each would make precipitate a hard landing, yet our conviction remains in the case for a nominal recovery. In our report, we explain the analysis underpinning our views and provide a forecast of potential returns across equities, fixed income, convertible bonds and balanced portfolios for both scenarios.
To read the full report, please use the download button provided.
A year of divergence that should favour active managers 2025
This document is a Corporate Communication for Professional Investors only and is not a marketing communication related to a fund, an investment product or investment services in your country. This document is not intended to provide investment, tax, accounting, professional or legal advice.
