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Overview
Welcome to the sixth edition of our annual investment publication, Agenda 2025. This document is compiled by our investment team headed by our Chief Investment Officer, Tracey McNaughton.
We have noted previously the futility of writing an annual outlook given its short-term focus and the inherent uncertainty that is always and forever present. In the words of Bob Dylan “there is nothing so stable as change”. Instead, think of this work as an update on the map that will guide you to your investment outcome. We offer signposts to watch out for along the way that may affect your perspective.
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Global Growth
Slightly weaker global growth in 2025 will mask large differences as trade tensions and geopolitical risks affect countries in unique ways. The US will lead the way for the developed world while robust growth in India will see South Asia be the fastest growing region.
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Inflation
Since peaking in 2022, world inflation has fallen significantly. Further declines are expected but progress will be hampered by a more introverted world where the efficient flow of goods, capital and labour is impeded and where multiple supply chains are built in the name of national security.
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Interest Rates
Inflation has peaked and the easing cycle has begun but the prospect of trade restrictions and tighter immigration policy will give central bankers pause for thought before cutting interest rates further.
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Fiscal Policy
It is likely the US will lose its last remaining triple-A credit rating in 2025. The size of the federal debt has risen above the size of the economy, reaching a level last seen during World War II. The US is not alone. Political fragmentation is making it harder for politicians to see eye-to-eye on fiscal matters globally.
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Bond Yields
Having tamed runaway inflation, most central banks are now aligned in cutting rates. But as we saw in 2024, that doesn’t mean smooth sailing. Acute geopolitical uncertainty and structural demands on the public purse mean bond yields will remain elevated.
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Equities
Follow the money – invest where governments are spending, companies are investing, and consumers are buying. The US is the clearest
and most obvious destination for investors’ capital in 2025. A moribund, ageing and over-regulated Europe provides little alternative while Japan is longer-term structurally positive. -
Currencies
The U.S. dollar is expected to face upward pressure from tariffs, the strength of the U.S. economy, geopolitical uncertainty and a central bank faced with more inflation pressure than most others.
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Alternatives
Investors can benefit from broadening portfolios into private markets. This is particularly evident in the AI theme, where the private sector now makes up over a quarter of all deals and more than a third of all capital raised.
