Global Equities
December 2024
- Political shocks could lead to excellent opportunities to increase exposure to equity markets
- Volatility can be the friend of the active investor in a way it rarely can to the passive participant
- We are pragmatic in our approach to security selection
1. What do you think could be the biggest challenge or opportunity for clients in 2025?
The potential for significant headline volatility will continue to increase in 2025 as we see the presidential return of Donald Trump to the White House. On this occasion, unlike on his initial arrival in 2017, his Republican Party will enjoy working majorities in the House of Representatives and the Senate, as well as a conservative-leaning Supreme Court. It also appears at the time of writing that this is likely to be a less chaotically formed administration, with a better-formed plan in place than the first Trump term. Time will tell, but given the new president will be able to serve only one term without the possibility of re-election, we may witness more aggressive policy enaction than before. This would, of course, set the US on collision course with China, which has recently attempted to jump-start its sluggish economy and stock market, beset by deflation and real estate, with a series of stimulus measures. Strap in, folks.
By no means will volatility be generated solely by this central dynamic. For example, voter dissatisfaction abounds across European economies, beset by generational social clashes and stagnant economies. The potential for political shocks is heightened, and the opportunities which fear over regime change could engender may represent excellent opportunities to increase exposure to equity markets.
2. What do you see as the one major investment opportunity for you in 2025 and how can you capitalise on it?
As we move into 2025 the macropolitical backdrop, together with the stage of the economic cycle at which we find ourselves, mean that individual stocks as well as broader sectors and markets are likely to diverge more than in the recent past. The major opportunity, then, is individual stock picking. Not only will owning the index leave the investor skewed significantly to a small number of mega-cap names dominating global markets, but it will also relieve him or her of the opportunity to outperform a flat or falling market. Volatility can be the friend of the active investor in a way that it rarely can to the passive participant. Our focused stock-picking approach, driven by our four structural themes, and our willingness to be nimble where outstanding opportunities in favoured long-term stocks present themselves, should stand us in good stead in this environment.
3. What is the biggest risk to your asset class next year and how can you mitigate that risk, or even turn it into an advantage?
Inflation expectations have continued to gyrate for some time now, and a fast series of policy rate cuts, seen as inevitable as recently as early August, is now being viewed as far from certain. Indeed, probable US tax cuts and – if enacted as threatened – import tariffs are unlikely to help inflation fall. Investors will be looking for evidence of demand destruction as a result of this, and whether underlying consumption can withstand a prolonged bout of higher structural price rises.
We are pragmatic in our approach to security selection and enjoy a broad set of sector expertise and valuation approaches across the team. This allows us to re-evaluate equity exposure in the event of significant changes in the rate outlook should this be necessary, and to adjust geographical and sector weightings accordingly within a thematically backed and thoroughly researched list of favoured stocks across the globe.
Paul Markham leads Global Equity strategies at GAM Investments.
Important disclosures and information
The information contained herein is given for information purposes only and does not qualify as investment advice. Opinions and assessments contained herein may change and reflect the point of view of GAM in the current economic environment. No liability shall be accepted for the accuracy and completeness of the information contained herein. Past performance is no indicator of current or future trends. The mentioned financial instruments are provided for illustrative purposes only and shall not be considered as a direct offering, investment recommendation or investment advice or an invitation to invest in any GAM product or strategy. Reference to a security is not a recommendation to buy or sell that security. The securities listed were selected from the universe of securities covered by the portfolio managers to assist the reader in better understanding the themes presented. The securities included are not necessarily held by any portfolio nor represent any recommendations by the portfolio managers nor a guarantee that objectives will be realized.
This material contains forward-looking statements relating to the objectives, opportunities, and the future performance of the U.S. market generally. Forward-looking statements may be identified by the use of such words as; “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential” and other similar terms. Examples of forward-looking statements include, but are not limited to, estimates with respect to financial condition, results of operations, and success or lack of success of any particular investment strategy. All are subject to various factors, including, but not limited to general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors affecting a portfolio’s operations that could cause actual results to differ materially from projected results. Such statements are forward-looking in nature and involve a number of known and unknown risks, uncertainties and other factors, and accordingly, actual results may differ materially from those reflected or contemplated in such forward-looking statements. Prospective investors are cautioned not to place undue reliance on any forward-looking statements or examples. None of GAM or any of its affiliates or principals nor any other individual or entity assumes any obligation to update any forward-looking statements as a result of new information, subsequent events or any other circumstances. All statements made herein speak only as of the date that they were made.
The information contained herein is given for information purposes only and does not qualify as investment advice. Opinions and assessments contained herein may change and reflect the point of view of GAM in the current economic environment. No liability shall be accepted for the accuracy and completeness of the information contained herein. Past performance is no indicator of current or future trends. The mentioned financial instruments are provided for illustrative purposes only and shall not be considered as a direct offering, investment recommendation or investment advice or an invitation to invest in any GAM product or strategy. Reference to a security is not a recommendation to buy or sell that security. The securities listed were selected from the universe of securities covered by the portfolio managers to assist the reader in better understanding the themes presented. The securities included are not necessarily held by any portfolio nor represent any recommendations by the portfolio managers nor a guarantee that objectives will be realized.
This material contains forward-looking statements relating to the objectives, opportunities, and the future performance of the U.S. market generally. Forward-looking statements may be identified by the use of such words as; “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential” and other similar terms. Examples of forward-looking statements include, but are not limited to, estimates with respect to financial condition, results of operations, and success or lack of success of any particular investment strategy. All are subject to various factors, including, but not limited to general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors affecting a portfolio’s operations that could cause actual results to differ materially from projected results. Such statements are forward-looking in nature and involve a number of known and unknown risks, uncertainties and other factors, and accordingly, actual results may differ materially from those reflected or contemplated in such forward-looking statements. Prospective investors are cautioned not to place undue reliance on any forward-looking statements or examples. None of GAM or any of its affiliates or principals nor any other individual or entity assumes any obligation to update any forward-looking statements as a result of new information, subsequent events or any other circumstances. All statements made herein speak only as of the date that they were made.