In our 2025 Mid-Year Investment Update, we revisit our forward-looking investment views in light of the changing global economy, assess the impact on equity and fixed income markets, and highlight where we see opportunities across markets. We believe that diversification, flexibility in asset allocation and portfolio positioning will remain critical to achieving successful investment outcomes for the remainder of 2025—an environment where active management is well-positioned to add value.
Key takeaways
- Policy and Volatility: Tariffs and shifting economic policies drove market volatility in the first half of 2025. While changes to tax law and deregulation efforts may support long-term growth, short-term uncertainty remains.
- Global Positioning: Regional divergence is creating compelling investment opportunities. A diversified, nimble approach is key to navigating markets in a more a desynchronized world.
- Fixed Income Outlook: We maintain our higher-for-longer view on rates. The Fed is likely to stay on hold, until there is a tacit change in inflation or unemployment data. Fiscal deficit concerns may add upward pressure on treasury yields.
- Equity Strategy: U.S. large-cap valuations remain elevated but select large cap growth sectors continue to justify premiums. Market breadth continues to improve, creating opportunities in large-cap value and small/mid-cap names.
- International Equities: Despite strong YTD performance, international stocks remain attractively valued. EU policy shifts and a weaker dollar support selective exposure.
- Alternatives: Private credit and PE secondaries provide diversification and return potential.
U.S. Political Update: Tariffs, Taxes and Turbulence
The narrative is focused on taxes, tariffs, and deregulation are — and the markets are watching. See what’s moving in Washington, what’s stalled, and what it means for long-term strategy.
Global Economic Outlook: Navigating Divergence and Uncertainty
Growth is slowing and trade uncertainty lingers, leading to diverging policy moves across major economies — creating both complexity and opportunity in global markets.
Fixed Income: Staying Balanced Amid Continued Uncertainties
Strong fundamentals and favorable yields position investment grade credit as an area of opportunity for fixed income investors. Duration and yield curve positioning are key.
Mid-Year Equity Outlook 2025: Maintaining U.S. Leadership Amid Global Change
Despite a volatile first half, U.S. equities remain well-positioned for long-term growth — driven by innovation, resilient corporate fundamentals, and strong secular leadership.
Alternatives Outlook: Additional Sources of Yield and Portfolio Diversification
Alternatives delivered portfolio stability, yield, and new opportunities in the first half of 2025 — especially in areas including private credit and private equity secondaries.