Wealth Management: Top Investment Themes for 2025
This is a translation from the original article published in German in NZZ in which Guy Ertz, Deputy Global Chief Investment Officer for BNP Paribas Wealth Management, shares BNP Paribas’ key investment themes for 2025.
Opportunities and Risks of the Goldilocks Economy
NZZ
24.01.2025
The new year offers many opportunities for investors: lower interest rates, exciting themes in the areas of infrastructure, AI, and health, as well as greater diversification – five key trends to optimally benefit in 2025.
Despite geopolitical tensions and numerous elections, financial markets remained remarkably stable last year. This was due to moderate economic growth, declining inflation, and falling key interest rates. This balanced macroeconomic environment is referred to as the “Goldilocks scenario” – a state where the global economy neither grows too strongly nor cools down too much, favoring stable assets and solid corporate profits.
This is the assessment of Guy Ertz, Deputy Global Chief Investment Officer in Wealth Management at BNP Paribas and a member of the International Investment Policy Committee. BNP Paribas has been present in Switzerland since 1872 and today has around 1,000 employees in Zurich, Geneva, and Lugano.
In the new year, the refinancing of high government debt, overvalued large US stocks, and narrow risk premiums on corporate bonds could weigh on market performance. At the same time, global liquidity, influenced by central bank measures, will play a central role in 2025.
Five key trends are emerging that investors can take advantage of: In addition to lower interest rates and the modernization of infrastructure, broader diversification, targeted AI investments, and opportunities in the healthcare sector are coming into focus. Particularly interesting is the megatrend of aging, which more and more companies are focusing on. Here are the five most important recommendations at a glance:
Opportunities through Monetary Policy
Lower interest rates support credit-financed investments such as real estate, infrastructure, and private equity. Real estate funds in the Eurozone appear particularly attractive. Short-term interest rates are likely to fall faster than long-term rates this year, benefiting banks. US financial institutions also benefit from planned deregulation.
Economic development in the US and China is expected to slightly decline at a high level, while Europe anticipates moderate recovery. In Switzerland, economic growth of one percent is forecast for 2025.
The decision of the Swiss National Bank (SNB) to cut the key interest rate by 50 basis points shows its determination to counter deflation risks. Another reduction of 25 basis points could follow in March.
What does this low-interest-rate environment mean for investors? Swiss stocks continue to offer more attractive potential with an average dividend yield of three percent compared to government bonds with yields below one percent. One should decide based on their own risk profile.
Infrastructure as a Key Theme
Physical and digital infrastructures are essential for connecting people and providing them with goods, information, and resources. Roads, the internet, energy, and water supply ensure access to basic necessities.
Investments in infrastructure are further accelerated by technological advances and climatic challenges. Examples of interesting investment opportunities include transportation infrastructures in the US and Europe, as well as US energy infrastructure for liquefied natural gas. Companies involved in drinking water treatment also offer potential.
Companies developing security solutions against cyber threats and the industrial metals sector, such as copper needed for modernizing the electricity infrastructure, are also exciting.
Diversification to Minimize Risk
To reduce risks, broader diversification across asset classes and regions is recommended. Investors should diversify their portfolios away from the strong concentration on US technology stocks and also focus on other sectors and US small- and mid-caps.
Regionally, the US and UK offer a lot of potential. In Asia, Japan, Singapore, South Korea, and Indonesia are in focus. Investment-grade corporate bonds in euros and US dollars also open up interesting opportunities.
For broader diversification, additional asset classes such as commodities, real estate funds, and alternative strategies, such as trend-following or relative-value, are recommended. The recent correction in precious metal prices also offers a favorable entry point for gold and silver.
Artificial Intelligence as a Growth Driver
AI creates numerous opportunities across various industries – not just in the technology sector. The “AI investment wave” and the desire for an energy transition thus open up potential in the healthcare, energy, and other non-tech sectors.
Companies that indirectly benefit from AI investments offer attractive opportunities. Potential exists in industrial companies, media and retail companies that could achieve productivity gains and cost reductions through AI. AI also shows great potential in healthcare – for example, in drug research and diagnostics.
Longevity as a Megatrend
With increasing life expectancy, advances in diagnostics and therapy are gaining importance. Many retirees are postponing their retirement to remain productive longer. Companies that respond to these developments offer interesting investment opportunities.
Opportunities exist in selected pharmaceutical stocks, biotechnology, and medical technology. Real estate funds and REITs focused on healthcare are also attractive.
Companies focusing on health and wellness, such as those offering special foods or dietary supplements, could also benefit. Consumer goods and service providers focusing on older people are also in the spotlight.