2025 global outlook: Touchdown?
Many of the themes that are likely to drive investor returns are, we believe, just as relevant to public markets as to their private counterparts.
The following is an extract from our 2025 global outlook.
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.
Key risks
The value of any investment and any income taken from it is not guaranteed and can go down as well as up, and investors may get back less than the amount originally invested.
Whilst we have incorporated ESG information into investment decision making and stewardship practices, there can be no assurance that any responsible investing goals will be met.
Recommended content for you
Bill Hughes
Global Head of Real Assets
Bill joined Legal and General in 2007 and is responsible for transforming its UK property fund management business into a global real assets platform. Operating in both the direct investment and lending markets, today it actively invests and manages over £35bn of assets across real estate, infrastructure and corporate and alternative debt. Bill continues to play an active role in several influential government and industry committees around responsible investing, infrastructure, urban regeneration and housing. He is a Global Governing Trustee of the Urban Land Institute and is on the UK Net Zero Carbon Buildings Standard (NZCBS) Governance Board. Bill is also Chair of the Property Industry Alliance (PIA), which brings together the UK’s leading property bodies to give them a stronger collective voice on issues such as policy, research and best practice.
Prior to joining Legal & General, Bill was CEO at RREEF UK (the Real Estate Fund Management business of DWS) and Head of Research and Deputy Managing Director at Schroder Property Investment Management. Bill has an MA in Economic Geography from the University of Edinburgh, an MSc in Property Investment from City of London University, a Diploma in Sustainability from the University of Reading and is a member of the Institute of Investment Management and Research.
Related articles
