2025 global outlook: Touchdown?

In our 2024 investment outlook, we stressed the importance of staying humble. It turns out that we were correct in many of our conclusions, not least that inflation and growth dynamics would vie with political risk to dominate the market narrative.

But when looking ahead to 2025, humility remains more important than ever. The big macro story is, of course, Donald Trump’s victory in the US presidential election. And the temptation is to assume similar economic and market responses to his agenda today as to the policies advanced by the first Trump administration.

This would be a mistake, in our view. Indeed, we believe markets are mispricing a host of risks – and opportunities – regarding the outlook for 2025.

What we can say with certainty, though, is that many of the themes that will drive investor returns next year, and for the rest of this decade, are just as relevant to public markets as to their private counterparts. These include digitalisation, demographics, decarbonisation and deglobalisation.

That’s why for the first time in this report, we are publishing the entirety of our private markets outlook, from Rob Martin’s investment strategy and research team, alongside the regular contributions our clients have come to expect. Key takeaways include:

We expect another strong year for private credit, amid higher-for-longer rates and strong bank competition

• We see tactical opportunities in real estate due to significant repricing
• While leverage and refinancing costs are likely to weigh on some areas of infrastructure, we think others will see robust asset creation

We also discuss:

• Why we think market participants may be underestimating the impact of future US tariffs – and what that means for the fabled ‘soft landing’
• The prospects for fixed income strategies after the end of ‘peak rates’
• The options for defined benefit pension schemes with hearty surpluses
• Why we believe the economics of clean power is compellingly simple

Blended solutions

With private markets playing a growing role in portfolios, we favour a targeted, thematic approach when allocating to the asset class. We expect approaches that balance exposure to it, with mechanisms to deliver liquidity, will become increasingly important, as investors ultimately look for blended public and private market solutions.

This also explains the broader focus of our outlook and the strategy underpinning our newly formed Asset Management division, which seeks to harness our expertise across both public and private markets.

In doing so, we are realising the vision of our parent group for a growing, simpler, and better-connected Legal & General. Our objective is to meet the shifting needs of our customers, clients and partners – regardless of what the future brings.

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