ILIM Investment Outlook 2025
The global investment landscape looks set to enter a period of divergence as the return of a Trump administration and the America First policy agenda sets the tone for the year ahead. Policies aimed at domestic growth such as tax cuts, deregulation and tariffs are likely to bolster US economic dominance. However, this could also provoke significant reactions from global counterparts, leading to heightened volatility as well as a fragmented growth outlook.
What does it all mean for investors and how should capital be allocated? Where are the standout opportunities?
We started and are ending 2024 positive on risk assets, which have delivered strong returns for our clients. As we face 2025, investors will imminently have to grapple with what the return of a Trump presidency will mean for the political and economic world order. Though nothing is confirmed in terms of policies to be enacted under Trump 2.0, it is widely anticipated that there will be an increase in tariffs, tax cuts, tighter immigration policy and deregulation. This policy mix will offer both opportunities and challenges.
Our base case for 2025 is to see continued, but moderating, global growth, led by a strong US economy, with regional disparities becoming apparent. Trump’s potential corporate tax cuts and deregulation can act as a catalyst for continued strength for US companies relative to the rest of the world, especially Europe and China. This supports continued US exceptionalism. On the downside, more aggressive tariff policies and stricter immigration, in the face of already elevated equity market valuations pose risks.
Additionally, a stronger growth backdrop could have an inflationary impact which would put upward pressure on bond yields and eventually equities. This mix of opportunities and uncertainties creates a broad range of potential outcomes centred on a base case of steady but moderating global growth.
We see this central case of a relatively supportive growth backdrop, continued moderation in inflation and further policy easing from central banks as positive for risk assets, while fixed income offers both income and diversification value to investors.
Looking into 2025, the macroeconomic and geopolitical backdrop under a Trump-led America leaves markets susceptible to increased volatility going forward particularly given already high valuations, risk of a less benign tariff position and negative implications for global trade and growth. In this environment, investors require a disciplined and robust approach to asset allocation that strikes the right balance between managing downside risk, while remaining nimble enough to take advantage of opportunities and market dislocations as they occur. We continue to emphasise the need for a balanced approach and diversification across portfolios to build resilience against shocks and to deliver for strong investment outcomes through this potentially divergent cycle ahead.
Explore our 2025 outlook views in more depth below, including the key themes by asset class.
Webcast: ILIM 2025 Investment Outlook
ILIM’s Chief Investment Officer Anthony MacGuinness and Investment Strategist Lenny McLoughlin discuss the key investment outlook themes for 2025 with Denise Armstrong, Head of Strategic Partnership. Key highlights include:
- Implications of a Trump 2.0 Presidency on the macro and geopolitical backdrop
- Reactions from global counterparts and expected heightened volatility
- Our outlook by asset class
Investment Highlights
Investment Outlook 2025
This outlook is intended as a general review of investment market conditions. It does not constitute investment advice and has not been prepared based on the financial needs or objectives of any particular person. It is intended for the use of institutional and other professional investors.