Macquarie Asset Management has released its Outlook 2025 report, offering insights into the factors expected to shape the investment landscape and asset class performance in the coming year. The report, titled "Plan for growth, prepare for volatility," anticipates continued global economic health, largely due to resilient consumer spending in developed countries.
In 2024, investors experienced strong returns with a classic 60/40 portfolio yielding an 18.2% return after a 13.3% gain in 2023. Inflation developments have played a significant role in this environment, with rates nearing 2% across developed nations, allowing central banks to normalize monetary policies. Despite these favorable conditions, Macquarie maintains that we are entering a 'new normal' where neutral rates will likely remain higher than those of the past decade.
Ben Way, Group Head of Macquarie Asset Management, stated: “This year’s Outlook report reflects our view that financial conditions will continue to normalise in 2025. The past year demonstrated the skill of policy makers in navigating the post COVID inflationary surge as well as the resilience of financial markets, leading to strong returns for investors in listed markets."
The report also highlights potential structural changes due to de-globalization and geopolitical developments as crucial considerations for long-term investing success. In particular sectors like real estate and infrastructure are poised to benefit from falling interest rates and robust economic growth.
Real estate is expected to gain from lower interest rates over the next one to two years while infrastructure investments may see rising valuations and earnings driven by GDP growth. Digital infrastructure is identified as having particularly strong prospects for 2025.
In equities markets, despite some disconnection from macroeconomic fundamentals observed recently, opportunities remain abundant with experienced asset managers potentially adding significant value amid volatile policies and geopolitical influences.
For debt and credit markets, central bank easing cycles are anticipated to provide support though aggressive price gains may be limited given current market conditions.
To delve deeper into these perspectives, readers can access the full Outlook 2025 report provided by Macquarie Asset Management.