by Global Investments Team
July 14, 2025
Introduction
As 2025 unfolds, investors are facing growing global uncertainties—from shifting trade policies and political transitions to economic slowdowns and rising inflation. In this mid-year outlook, we explore five critical themes to help investors build resilient portfolios, pursue growth, and stay agile despite turbulence.
Key Takeaways
Trump 2.0: Risks and Opportunities: Despite political and trade uncertainty, the outlook suggests markets in the U.S., Europe, and Japan can set new highs over the next year.
Portfolio Resilience: Addressing risks like inflation, growth shifts, and erratic policy is more important than ever in portfolio construction.
U.S. Dollar Trends: While the dollar’s value is declining, it still holds its status as the world’s reserve currency.
Artificial Intelligence Momentum: AI is expected to progress rapidly, thanks to decreasing costs and improving capabilities.
Private Markets and Dealmaking: Shifting asset dynamics and growth in long-term funds are creating fresh opportunities, especially in private investments.
Trump 2.0: Should Investors Cheer or Brace for Risk?
Markets entered 2025 with high expectations for President Trump’s second term. However, investor optimism quickly gave way to confusion as newly imposed tariffs and unpredictable policy messaging clouded the outlook. Instead of immediate tax cuts or deregulation, investors encountered uncertainty—undermining short-term confidence. Despite these headwinds, we believe that equity markets in the U.S., Europe, and Japan remain positioned for potential gains. However, if retaliatory tariffs remain elevated or expand, the risk of recession increases, especially as corporate profits come under pressure.
Portfolio Resilience in an Unpredictable World
With inflationary pressures, trade tensions, and policy unpredictability shaping today’s environment, building a resilient, long-term portfolio has never been more essential. Investors are urged to:
Diversify across sectors, regions, and asset classes
Focus on quality companies with strong balance sheets
Be selective in credit, given evolving interest rate environments
This approach helps mitigate short-term shocks while aiming to maintain long-term momentum.
The U.S. Dollar: Declining but Dominant
Although the U.S. dollar has started to retreat from its multi-decade highs, we see its role as the world’s reserve currency remaining intact—for now. While shifts in trade balances and monetary policy may continue to pressure the dollar, there are no clear alternatives that can challenge its dominant position in global markets in the near term. However, currency movements still factor significantly into international portfolio strategies.
AI Innovation: Momentum Continues
One bright spot in an otherwise uncertain environment is continued progress in artificial intelligence. Falling costs, advances in computing power, and improved adoption by businesses are driving its next wave. We see AI as a multi-year investment theme, poised to disrupt sectors ranging from healthcare and finance to manufacturing and retail. Investors may benefit from targeted exposure to companies and funds supporting AI infrastructure, applications, and innovation.
Private Markets and Dealmaking: Long-Term Opportunity
While public markets are volatile, private markets are gaining traction. As institutional money continues to flow into private equity, venture capital, and private credit, dealmaking momentum is building again—albeit more selectively. We note that long-duration capital, reduced competition for deals, and strong company fundamentals are encouraging a fresh wave of investment activity. Disciplined investors may find value in growth-stage companies and alternative investment vehicles offering diversification.
Conclusion: Embracing Discomfort, Focusing on Fundamentals
The remainder of 2025 is expected to be messy, but not disastrous. Successful investors will need to be comfortable with discomfort—accepting uncertainty while staying committed to long-term growth strategies. Emphasis on resilient portfolios, intelligent diversification, tech innovation, and alternatives could help investors weather near-term storms while capturing emerging opportunities.