No, we don’t think so. While President Donald Trump made numerous campaign pledges that could be seen as beneficial, US large-cap stocks will need more than policy shifts to outperform US small-cap stocks in 2025.
We expect liquid credit returns to decline due to low credit spreads and anticipated Fed easing. Direct lending returns should moderate but continue to outperform their liquid counterparts. Meanwhile, insurance-linked securities will continue to benefit from strong demand, and increased transaction volumes should support both specialty finance and credit opportunities managers. In emerging markets, currencies should become a tailwind for local bonds.
We expect public infrastructure equities to perform similarly to developed market equities in 2025, propelled by supportive regulations for energy transition and strong demand for power infrastructure to fuel AI. While we believe US REITs should underperform US equities, US private real estate funds raised in 2025 should generate above-average returns, benefiting from distressed deals and solid fundamentals.
This note provides an update on the current opportunity set in infrastructure investments and highlights some of our preferred areas in the private space, including energy transition and digital infrastructure.
No, not at this time. While the Trump administration’s policies will impact markets, we expect other factors will be larger drivers of long-term investment performance.
Markets have been jittery as the US presidential election approaches. The macro backdrop is shifting, with slowing economic growth and ebbing inflation meaning a cycle of monetary easing beckons. At the same time, elevated valuations for a variety of assets are causing investors to reconsider narratives around themes, such as AI investment, and consider asset allocation tweaks. Investors should resist positioning portfolios for any one political outcome and remember that increased market volatility around elections is common. In the following report, we discuss our views on five common election-related narratives in the marketplace today.
Yes. We believe higher-quality US small-cap companies trade at a significant discount to large-cap peers, and their balance sheets have held up better than headlines suggest.
This paper provides an update on recent developments in private credit and highlights several opportunities that investors should explore for the remainder of 2024.
Yes. A record of roughly $925 billion of US commercial real estate (CRE) debt is maturing in 2024 and refinancing needs in future years are also significant.
We expect direct lending and European opportunistic private credit funds will outperform their long-term averages because of high asset yields and the pull back in credit availability among traditional lenders. We like structured credits, particularly high-quality collateralized loan obligation debt, and we expect high-yield bonds will outperform leveraged loans. But we remain neutral on high yield because spreads are compressed.