Investors looking for returns in 2025 should consider moving beyond the US tech giants that have dominated markets in recent years, according to Schroders.
At the Schroders Crystal Ball 2025 Investment Outlook event, Johanna Kyrklund, Schroders’ Chief Investment Officer, urged investors to look beyond US tech heavyweights in search of returns in 2025. While many wealth managers are bullish on US equities, including tech firms benefiting from advancements in artificial intelligence, Kyrklund sees greater potential in a diversified global approach.
While the ‘Magnificent 7’—Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms, and Tesla — were pivotal to market gains in 2023 and 2024, the era of US mega-cap dominance may be waning.
Kyrklund also underscored the importance of diversification to navigate ongoing geopolitical uncertainties and advocated for an active investment approach to capture emerging opportunities.
‘We think there are return opportunities to be had, even after the gains of 2024. But investors may need to look beyond recent winners,’ Kyrklund said. She emphasised that markets are likely to broaden out in 2025, with new opportunities emerging in different sectors and regions. ‘US utilities, for instance, are attractive, and equity valuations outside the US remain compelling.’
Kyrklund remained optimistic about bonds for income generation, gold as a store of value, and decarbonisation as a key investment theme.
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‘Equity investors have grown used to a small number of large companies powering the stock market’s gains. But that pattern was already changing during 2024 and we think there is potential for markets to broaden out further,’ she said.
‘Different sectors and different regions may start to appear more attractive. An active approach will be needed to avoid overexposure to previous top performers, and to capture new return opportunities as they emerge.
‘Equity market valuations do not look expensive outside the US. And an environment of positive growth and lower interest rates should benefit corporate earnings, which is what drives shares over the long term.’
Nils Rode, CIO for Private Markets at Schroders Capital. highlighted 2025 as a promising year for private markets, driven by the alignment of private market fundraising, technological disruption, and economic cycles. Rode identified small-to-mid buyouts, venture capital, and real estate as particularly attractive areas in private equity. Private debt strategies also continue to offer robust premiums.
[See also: Private markets firms embrace social media to attract new generation of investors]
‘Simultaneously, considering ongoing geopolitical tensions and the elevated risks of escalating conflicts, the role of private markets in providing portfolio resilience remains crucial. Meanwhile, and despite political changes in the US, we expect the trend towards decarbonisation to persist, with private market investments playing a significant role in driving the global energy transition,’ he said.
Schroders’ outlook encouraged investors to remain flexible, adopt active strategies, and capitalise on new growth opportunities in a dynamic and evolving market landscape.
She said valuations outside the US remain reasonable, and lower interest rates combined with positive growth could boost corporate earnings globally. Bonds, too, remain appealing for income generation, and diversification is key to managing geopolitical uncertainties. Kyrklund also highlighted decarbonization as a critical investment theme, noting that gold offers a stable store of value in turbulent times.
