Decarbonisation Requires Balancing Energy Realities With Ambitions
The multi-decade energy transition demands pragmatic pathways and investment opportunities abound for alpha generating potential.
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 materialise 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.
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.
References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities. The securities referenced may or may not be held in the portfolio at the time of publication and, if such securities are held, no representation is being made that such securities will continue to be held.
The views expressed herein are those of PGIM investment professionals at the time the comments were made, may not be reflective of their current opinions, and are subject to change without notice. Neither the information contained herein nor any opinion expressed shall be construed to constitute investment advice or an offer to sell or a solicitation to buy any securities mentioned herein. Neither PFI, its affiliates, nor their licensed sales professionals render tax or legal advice. Clients should consult with their attorney, accountant, and/or tax professional for advice concerning their particular situation. Certain information in this commentary has been obtained from sources believed to be reliable as of the date presented; however, we cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. The information contained herein is current as of the date of issuance (or such earlier date as referenced herein) and is subject to change without notice. The manager has no obligation to update any or all such information; nor do we make any express or implied warranties or representations as to the completeness or accuracy.
Any projections or forecasts presented herein are subject to change without notice. Actual data will vary and may not be reflected here. Projections and forecasts are subject to high levels of uncertainty. Accordingly, any projections or forecasts should be viewed as merely representative of a broad range of possible outcomes. Projections or forecasts are estimated based on assumptions, subject to significant revision, and may change materially as economic and market conditions change.
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