Happy New Year. At Acuvest, we hold a deep belief in the significance of four pillars in life: Family, Friends, Health, and a sense of Purpose in what we do. These principles shape how we work with clients, where we see our role as enablers – helping people maximise their life experiences. While we apply our expertise to guide investment decisions, our approach also helps clients prioritise what’s truly important to them and their loved ones. We strive to facilitate life choices where finances serve as a means to an end, not the end itself.
May 2025 be a great year of experiences for you and your loved ones.
2025 Investment Outlook
As we embark on 2025, the investment landscape is shaped by a mix of optimism, driven by U.S. market resilience, and challenges, stemming from geopolitical and macroeconomic uncertainties. The return of Donald Trump to the presidency, alongside evolving central bank policies and divergent regional growth trajectories, creates both opportunities and risks for investors.
2024 Recap: A Foundation for 2025
Last year set the stage for a cautiously positive outlook. Inflation moderated, central banks initiated rate cuts, and equity markets surged, buoyed by the prospect of AI-driven productivity gains and easing monetary policies. However, significant political changes, persistent geopolitical tensions and regional economic disparities highlight the complexities for the year ahead.
The Trump 2.0 Effect
Trump’s presidency introduces a consequential policy mix. Corporate tax cuts and deregulation could enhance U.S. corporate competitiveness, particularly in technology and infrastructure sectors. However, protectionist trade measures, heightened tariffs, and stricter immigration policies may create inflationary pressures and disrupt global trade. The key question is whether Trump’s policies will align with his rhetoric.
Growth with Regional Disparities
Global growth is expected to remain around 3%. The US is expected to maintain a growth advantage over the EU, supported by domestic resilience, innovation, and a pro-business agenda. Europe faces structural constraints, political instability, and potential monetary easing by the ECB, which may weaken the euro and dampen growth prospects. China’s economic struggles persist despite stimulus efforts, with trade tensions and lack of consumer confidence compounding challenges.
Market Implications
- Equities: The US is poised to maintain its leadership, supported by AI and pro-business policies, but elevated valuations increase downside risks. Europe and China may face challenges from weaker growth and trade disruptions.
- Fixed Income: Bonds offer diversification benefits, though rising yields and inflation risks may pressure returns.
- Alternatives: Private markets, including energy, infrastructure, and venture capital, present compelling opportunities in a landscape shaped by deregulation and innovation.
- Currencies: A potentially weaker US dollar, amid fiscal deficits and trade tensions, could benefit emerging market currencies.
Risks to Watch
Geopolitical risk remains high, with ongoing tensions in the Middle East, Ukraine, and Taiwan, as well as the potential for escalating global trade wars. These factors could exacerbate market uncertainty.
In the US, current equity market optimism hinges on inflation stabilising near 2%. However, the inflationary impact of tariffs and aggressive immigration policies could challenge this assumption, leading to higher inflation.
Additionally, heightened fiscal deficits may compound risks, potentially leading to higher than expected interest rates. Coupled with current elevated US equity valuations, markets face increased vulnerability to corrections.
Investment Approach for 2025
A disciplined and diversified portfolio remains vital in navigating market uncertainties. We maintain that patience, discipline, and a measured approach are critical for long-term investment success. Working closely with your advisor and adhering to a well-structured plan will help you navigate market shifts confidently and position you to seize emerging opportunities.
Striking the right balance between growth-focused investments, such as equities and private markets, and downside protection through fixed income and diversification, will be crucial for achieving robust investment outcomes.
2024 a Good Year for Risk Takers
The two tables below show that 2024 proved to be another good year for investors driven primarily by very strong equity market returns.
December and 2024 Market Numbers
The table below (courtesy of JP Morgan) illustrates the historical returns for a Euro investor across the main asset classes. The 2024 figures are notably strong. The key takeaway is the unpredictability of asset class performance from year to year. This underscores the importance of diversification, understanding the assets you invest in, and maintaining a disciplined process to keep your portfolio’s risk aligned with your strategy. Regular reviews and rebalancing are essential as asset values and market conditions evolve over time.
Asset Class Returns: 2016 – 2024
Largest Companies by Revenue
It may surprise you to know that Walmart remains the world’s largest company when ranked by revenue.
Source: Visual Capitalist
John Tuohy is Chief Executive of Acuvest, an Irish-owned, independent advisory firm specialising in wealth management, pensions, and investment advisory services for individuals, companies, pension schemes, charities, and institutions. John is a Chartered Financial Analyst (CFA) and a Fellow of the Chartered Association of Certified Accountants.
