2025 Investment Outlook: Bright spots in a world of anomalies

Discover our 2025 Investment Outlook, which focuses on emerging trends and strategies to help investors make informed decisions in a complex environment.

Market Story - 2025 Investment Outlook: Bright spots in a world of anomalies

Opportunities in a reconfigured world

The global economic outlook remains positive, with central banks managing inflation without triggering a recession, opening the door to potential rate cuts.

 

Political shifts in the U.S. and Europe will further influence fiscal policies and market stability, requiring investors to balance opportunities and risks in a complex environment.

Opportunities in a reconfigured world

2024.11 - Global Outlook 2025 - Monica DEFEND

Investment themes for 2025

Bright spots...

Play dynamic asset allocation in a world of anomalies

An anomalous cycle requires frequent reassessment of the economic backdrop and dynamic asset allocation, focus on risk assets in H1 (Equity and Investment Grade Credit).

Uncover income opportunities across the board

With yields near historic highs, central bank easing and no recession in sight, government bonds, credit, leveraged loans and EM bonds present attractive opportunities.

Broaden the opportunity set in equities and look at sectors

While valuations in US mega caps remain high, we see bright spots in Japan, Europe and the US (beyond mega caps).

Embrace the power of Asia and EMs’ comeback

India and Indonesia are long-term winners. In the short term, China may benefit from additional stimulus. EMs expected to outperform DMs.

Explore transformative long-term themes

Balancing growth perspectives and valuations in AI, clean energy, manufacturing re-insourcing, infrastructure, health care and an ageing population.

Diversify across different axes

Exploit volatility diversifiers (hedge funds and absolute return), liquidity diversifiers (private markets) and macro/geopolitical diversifiers (gold).

...in a world of anomalies

Macro anomalies Market anomalies

Amidst increasing US debt, strong household finances, and a resilient economic backdrop, investors face a complex landscape of macro anomalies.

High costs
of US debt

  

>$1.1 trillion will be spent on interest payments in 2024, highest on record1

Strong
household
finances

   7.9x net wealth as a share of US disposable income, highest in the past two years2

Healthy
liquidity

   in a resilient economic backdrop contrasts with high perceived macro uncertainty

Market anomalies are evident with extreme US equity valuations, concentrated global markets, and a stark contrast between low equity volatility and high bond volatility.

High equity
concentration		  

30% weight of top 7 stocks in the S&P5003
Stretched
valuations		   <3% of the time the S&P500 has been more expensive than now since 18814
Diverging
volatility
trends		   -21% in equity volatility in 2024 vs previous 10-year average
+34% in bond volatility5

7 key convictions for 2025

We find ourselves in an unconventional phase of the economic cycle, marked by a mix of positive opportunities and unique challenges such as market concentration and high debt levels.

Although global macro liquidity currently favours riskier assets, increasing policy uncertainty and geopolitical tensions underscore the importance of enhanced diversification.

  • US economy should moderate due to cooling domestic demand and labour market conditions.
  • Europe is set for a modest recovery, focusing on strategic investments.
  • EMs are likely to maintain a growth premium over DMs, with Asia as a key growth driver.

  • Emerging Asian economies are experiencing strong growth due to their dominant IT supply chain and supportive fiscal and monetary policies.
  • India and Indonesia are long-term beneficiaries, while ongoing re-routing and policy support should help stabilize the Chinese economy.

  • Geopolitical tensions, economic frictions, and ongoing conflicts will require companies to form new partnerships and relocate to mitigate risks.
  • Geopolitical shifts will create opportunities for new beneficiaries, and support traditional safe-havens like gold.

  • As inflation slows, central bank policy should continue to ease.
  • The return to neutral monetary policies and low recession risk highlights bonds’ income potential with yields higher than in the past.
  • Investment Grade, short-maturity High Yield credit, leveraged loans, EM bonds and private debt offer appealing opportunities.

  • A positive earnings backdrop and good macro liquidity support equity. Valuations are stretched, particularly US mega caps.
  • Seek value in Europe, equal-weighted indices, and sectors like financials, utilities, communication services, and consumer discretionary. 
  • Value investing and mid-caps serve as hedges against potential declines in growth and mega cap stocks. 
  • EMs are expected to outperform DMs. 

  • Private markets offer attractive opportunities amid slowing growth and expected rate cuts, particularly in infrastructure.
  • Private debt offers appealing income, with companies retaining strong bargaining power in lending negotiations.
  • The real estate market outlook is expected to improve in 2025.
 
Market Stories 2025 Investment Outlook - Private markets are lighting up, with infrastructure in focus

  • The economic backdrop presents bright spots in risky assets, but markets underestimate the challenges. 
  • The macroeconomic outlook, high valuations, and escalating geopolitical tensions require nuanced diversification. 

Investors should consider that geopolitical tensions may drive higher inflation and embrace risk diversifiers like inflation-linked bonds and gold. 

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Watch our Investment Outlook videos

Geopolitics Responsible Investing ETF’s

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Exploring the Future of International Relations

 

Anna Rosenberg, Head of Geopolitics at the Amundi Investment Institute, delves into the anticipated geopolitical risks for 2025.

 

 

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Moving beyond divergences : Responsible Investment is here to stay

 

In 2024, responsible investment continues to thrive. Elodie Laugel, Chief Responsible Investment Officer, dives into the resilient and evolving nature of sustainable investing.

Insights into ETF Trends

 

Vincent Denoiseux, Head of Investment Strategy at Amundi ETF, highlights a pivotal shift in the ETF market in 2024, emphasizing how these developments underscore the evolving role of ETFs in global investment portfolios.

2024.11 - Global Outlook 2025 - Vincent DENOISEUX LONG STEN

Explore our dedicated research & insights

Market Story - 2025 Investment Outlook: Bright spots in a world of anomalies

2025 Investment Outlook

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Transitioning riskier messier and diversifying world

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The rise of regional connectivity in Emerging Asia

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The extraordinary US cycle is becoming more balanced

Source: Amundi Investment Institute, Bloomberg.
1 US Treasuries data projection on gross interest payments.
2. Fed FOF, data as of 30 June 2024. Households and Nonprofit Organizations; Net Worth as a Percentage of Disposable Personal Income.
3.  Datastream as of October 2024.
4. Shillerdata.com, Robert J. Shiller. Refer to the Shiller CAPE.
5. Analysis on percentage change in average volatility levels in 2024 vs the 2013-2023 average. Bond volatility refers in levels of MOVE index (implied volatility indicator on the Treasury market), equity volatility refers to the VIX Index (implied volatility indicator for the S&P500)