2025 Outlook - Bridging the Divide: From Market Fragility to Portfolio Durability
By Crescent Team
Key observations from our 2025 Outlook:
Full valuations, concentrated U.S. large-cap indexes and the risk of reigniting inflation are shaping the key themes we believe will drive markets and portfolio positioning in 2025.
Recent market successes have pushed our 2025 10-year forecasts lower across most major asset classes. Long-term return premium for equities over fixed income is now at its narrowest since 2007, sparking important conversations about portfolio posture and risk allocation.
Rising reinflation risk leads us to increase our allocation to more flexible fixed income strategies (dynamic bonds) and TIPS while eliminating our global bond allocation.
We have modestly increased our preference for assets outside of U.S. equity to help mitigate concentration risk and skewed relative valuations.
Moving beyond passive toward active management and alternatives may offer a compelling opportunity to enhance portfolio resilience and adapt to the shifting landscape.
Our 2025 Outlook contains a look at financial market conditions, our 10-year capital market assumptions, and our investment themes for 2025.