Outlining GFI’s macro-economic backdrop for 2025, Dauchez said the global economic agenda is heavily dependent on new US administration policies as well as on how successful China’s measures to stimulate the economy will be, which would be a positive for Chinese equities, and the potential impact of increased US tariffs on China. He believes that China needs a deal with the US to move forward.

Dauchez expects strong growth of 2.3 per cent in the US driven by productivity gains and tax cuts to add fuel to the fire. There will also be inflationary pressures stemming from policies to prevent convergence towards the US Federal Reserve’s target, with the Fed expected to pause rate cuts at around 4 per cent mid-2025. He emphasised how China’s property woes will continue whilst Brazil and Mexico will have to cope with public finance woes and India will benefit from a booming domestic market.

Mediocre growth is forecast in Europe, with France and Germany known as the “sick men of Europe,” he added. “Spain will lead the way and Switzerland and the UK will do well,” he said.

Asset allocation and investment themes in 2025
Dauchez expects the US-led equity rally to continue, at least in the first half of 2025, with US growth stocks the arch-favourite to drive overall market performance. “The rally is seen to broaden to other segments of the equity market,” he added. “In the second half of 2025, the market direction depends on the first effects of the new Trump Administration policies.” Like other wealth managers, he favours small caps in 2025.

Other wealth managers, such as Standard Chartered, Northern Trust Asset Management, UBS Global Wealth Management, Pictet Asset Management and Goldman Sachs Asset Management also favour US equities in 2025. See more commentary here and here. Dauchez also believes that India and Indonesia are the few bright spots in emerging market equities due to domestic consumption resilience.

Dauchez highlighted how 2025 is not a year to hold cash, saying “gone are the days of cash is king” – investors need to seek new sources of income via equity and credit. He is a bit more prudent on fixed income, with global bonds seen as offering great opportunities. He emphasised that investment grade and high yield have historically been expensive, but recommended by most GFIs, and a bottoms-up approach and focus on quality is needed. “Short-term credit is seen by GFIs as the best cash re-deployment solution,” he added. "They are more bullish on the prospects for European fixed income than they are for European equity markets," he said.

Dauchez is positive on alternatives in 2025, with liquid alternatives favoured for diversification against changes in market momentum. He believes that the 60:40 rule in favour of equities and bonds no longer applies, with alternatives playing a more dominant role, moving to perhaps 30 per cent of an investor's portfolio from 10 per cent. He drew attention to private assets, notably private equity, being mentioned in virtually all GFI reports, as a way of helping investors diversify sources of return and enhance portfolio growth. He is also positive on gold in 2025, saying many investors like to have it in their portfolios.

His five investment themes – the 5 Ds – to shape the financial landscape beyond 2025 are debt, deglobalisation, demographics including healthcare, decarbonisation and the energy transition, digitalisation and AI.

What becomes clear in 2025. Cash is out, equities are in and fixed income remains ripe with opportunity, albeit with a slight note of caution sounded about the importance of quality.