Schroders’ experts have today shared their comprehensive 2025 outlooks across public and private markets, highlighting the opportunities and challenges investors face in light of significant geopolitical and economic developments.
Johanna Kyrklund, Schroders Group Chief Investment Officer, said:
“Leaving aside political risks, the economic backdrop remains benign. Inflation has moved in the right direction and interest rates are falling in the US and Europe. We expect a soft landing, and our expectation is that growth will reaccelerate as we move through 2025.
“Trump’s second term will represent an intensification of trends that were already in place: loose fiscal policy and an ongoing reaction against globalisation in the form of higher tariffs
“We see scope for positive returns from equities in 2025 but investors may need to look beyond the recent winners.
“Bonds don’t offer the same negative correlation benefits that they did in the last decade. However, the old-fashioned reason for owning bonds - to generate income - is back.”
Global fixed income: Stability and opportunity:
As we transition into 2025, the evolving policy landscape presents valuable opportunities within fixed income markets.
The changes anticipated under the new US administration, combined with fiscal developments in Europe, UK, and China, create a favourable setting for fixed income assets. Despite uncertainties, these dynamics offer potential for both income and capital appreciation.
Julien Houdain, Head of Global Unconstrained Fixed Income at Schroders, said:
"Fixed income assets now hold a crucial position in portfolios, not only for their attractive yield potential but also due to their capacity to enhance diversification. The current alignment of policy rates and yields removes significant barriers to bond investment, making bonds an essential component for building resilient portfolios.”
Lisa Hornby, Head of US Fixed Income at Schroders, said:
"We see attractive returns as nominal and real yields reach levels not observed since the 2008 financial crisis. This positions bonds as a viable income source, particularly in comparison to equities, where yields may not match current bond offerings.”
Abdallah Guezour, Head of Emerging Market Debt and Commodities at Schroders, said:
"Emerging market government and corporate bond yields are showing signs of tightening, indicative of growing investor confidence. This comes from the robust macroeconomic adjustments many of these markets have implemented in recent years, creating attractive investment avenues in high yield sectors.
"With emerging market corporate balance sheets in relatively strong positions and default rates set to improve, the potential for significant returns remains. However, a nuanced approach is crucial to navigating the challenges posed by the political climate in major economies like the US."
Global Equities: Broadening horizons and opportunities:
For global equities, the dominance of technology and AI has characterised this year's market, but the shifting dynamics suggest the potential for other sectors and regions to emerge. Amidst this backdrop, longer-term market strategies are poised to capture evolving opportunities.
Alex Tedder, Head of Global and Thematic Equities at Schroders, said:
"Despite the current elevated valuations, global equities, driven by a robust economic environment, can still offer reasonable returns. We anticipate a broadening of the market beyond the leading tech companies, uncovering value in previously overlooked sectors."
Tom Wilson, Head of Emerging Markets Equities at Schroders, added:
"Emerging markets offer compelling valuations, especially when excluding India and Taiwan, presenting unique investment angles. However, investors must navigate the uncertainties brought by geopolitical shifts and the changing US political landscape. We believe that a balanced approach, taking into account regional and sector-specific nuances, will be crucial for capitalising on these opportunities."
Both experts underline the importance of a diversified and adaptive investment strategy to effectively manage risks and take advantage of potential returns across the varied global equity landscape.
Private Markets: Strategic resilience and returns:
The outlook for private market investments is promising, with an emphasis on resilience amid geopolitical volatility. The alignment of private market cycles and technological disruptions presents compelling opportunities across sectors. Real estate and infrastructure equity are poised for growth, backed by attractive valuations and the decarbonisation transition.
Nils Rode, Chief Investment Officer at Schroders Capital, said:
“We anticipate 2025 to be an attractive environment for new private market investments, offering potential for both return and income generation as several cycles align favourably. These include the private market fundraising, technological disruption and economic cycles.
“Simultaneously, considering ongoing geopolitical tensions and the elevated risks of escalating conflicts, the role of private markets in providing portfolio resilience remains crucial. Meanwhile, and despite political changes in the US, we expect the trend towards decarbonisation to persist, with private market investments playing a significant role in driving the global energy transition.”
In addition, the small/mid-buyout and venture capital space is seen as one of the most attractive in private equity, with real estate also expected to enjoy a good vintage year, while the private debt premium remains attractive across several strategies.
For further detailed insights, please refer to Schroders’ full Outlook 2025 here.
For further information, please contact:
Charlotte Banks, Media Relations Lead, Public Markets
| +44 20 7658 9063 | |
Justine Crestois, PR Executive
| +44 20 7658 5186 |
Note to Editors
To view the latest press releases from Schroders visit: https://www.schroders.com/en/global/individual/media-centre/
Schroders plc
Schroders is a global investment manager which provides active asset management, wealth management and investment solutions, with £773.7 billion (€912.6 billion; $978.1 billion) of assets under management at 30 June 2024. As a UK listed FTSE100 company, Schroders has a market capitalisation of circa £6 billion and over 6,000 employees across 38 locations. Established in 1804, Schroders remains true to its roots as a family-founded business. The Schroder family continues to be a significant shareholder, holding approximately 44% of the issued share capital.
Schroders' success can be attributed to its diversified business model, spanning different asset classes, client types and geographies. The company offers innovative products and solutions through four core business divisions: Public Markets, Solutions, Wealth Management, and Schroders Capital, which focuses on private markets, including private equity, renewable infrastructure investing, private debt & credit alternatives, and real estate.
Schroders aims to provide excellent investment performance to clients through active management. This means directing capital towards resilient businesses with sustainable business models, consistently with the investment goals of its clients. Schroders serves a diverse client base that includes pension schemes, insurance companies, sovereign wealth funds, endowments, foundations, high net worth individuals, family offices, as well as end clients through partnerships with distributors, financial advisers, and online platforms.Issued by Schroder Investment Management Limited. Registration No 1893220 England. Authorised and regulated by the Financial Conduct Authority. For regular updates by e-mail please register online at www.schroders.com for our alerting service.