Volatility Lifts Demand for Defined Outcome Solutions
Amid rising market uncertainty, investors are increasingly turning to defined outcome solutions to balance between access to growth and exposure to risk.
ACTIVELY INVESTING THROUGH PARADIGM SHIFTS
Insights into emerging opportunities in a rapidly changing world
MODERATION MODE
Markets advanced in 2024 as the Federal Reserve joined global peers in shifting monetary policy toward easing. With election-related uncertainty now behind us, investors can more decisively focus on the opportunities ahead. Paradigm shifts with implications for all facets of the global economy continue to reshape the macro landscape, recasting risks and potential rewards alike.
MODERATING GLOBAL ECONOMY
The global economy remains resilient but is moderating with below-average GDP growth expectations in the U.S., euro area, and China.
STEADY TO LOWER RATES AHEAD
Major central banks eased short-term rates during the year and further rate cuts may materialize in 2025.
STRONG CASE FOR ACTIVE MANAGEMENT
Rising inflation or geopolitical risks could catch investors leaning the wrong way by surprise, making active management critical.
2025 INVESTMENT THEMES
Against this evolving backdrop, PGIM asset managers highlight key trends and related opportunities that they believe warrant the most investor attention as 2025 gets underway.
BOND BULL MARKET FUELS ACTIVE OPPORTUNITIES
Paradigm shifts typically observed over entire market cycles are playing out in market swings across a matter of quarters. As growth and inflation dynamics widen and prompt uneven central bank policy responses, we maintain a positive fixed income outlook and think current conditions offer a compelling entry point for investors.
SECULAR GROWTH TRENDS WEATHER CYCLICAL CHANGES
AI enthusiasm led notably strong returns in global equities in 2024, with market breadth expanding late in the year. While we view this as a healthy development for investors going into 2025, we believe active managers focusing on resilient secular growth trends will be especially well-positioned to reap the benefits of the new market regime.
Supportive Trends Accelerate Reit Rebound
The real estate market is gaining tailwinds for a sustained rebound as improving macro conditions and fundamentals create a good entry point for investors.
Demand For Direct Indexing Rises with Asset Values
After a second consecutive year of outsized equity returns, investors eager to lock-in profits and/or rebalance portfolios may benefit from direct indexing.
Middle Market Remains Private Credit Sweet Spot
Macro stability and monetary easing should accelerate the M&A cycle in 2025, benefiting middle market companies with attractive risk-adjusted return profiles.
Private Real Estate Cycle Takes a Positive Turn
As markets heal from sharp dislocations and bottoming values, lower rate potential boosts the dealmaking environment, fueling a brighter real estate outlook.
Retirement Investors Seek Spending Flexibility
Investors seeking to improve retirement outcomes may benefit from strategies geared towards optimizing equity allocations to meet spending needs.
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