Ben Waters, trader, is an experienced portfolio manager and options, equity and Delta One trader. In addition to overseeing his own investment portfolio, Benjamin Waters, trader, also manages outside capital. This article will provide an overview of investment trends predicted to feature prominently in 2025 and beyond.
Good Portfolio Hygiene
Just as people pay regular visits to their GP, savvy investors add periodic ‘check-ups’ to their to-do list. To practice ‘good portfolio hygiene’, investors must identify their goals and create a long-term plan to achieve their financial objectives.
With economic and market dynamics constantly shifting, fluctuations can lead to unexpected changes to asset portfolios, shifts that may not align with the investor’s long-term goals. Therefore, forward-looking investors regularly review their target asset mix, considering rebalancing where necessary by trimming oversized positions or adding underweighted assets to stay on track. By maintaining a balanced approach and adjusting allocations where necessary, investors can take advantage of strategic opportunities while simultaneously mitigating risk.
AI Deployments
Advancements in AI were anticipated to be one of the most disruptive influences in the investment management sector in 2024. In reality, that promise far surpassed expectations. As the opportunity buzz continues to grow, many organisations are scrambling to effectively harness AI solutions at scale without established models to guide them. AI innovations require strong control and data governance mechanisms, as well as a robust data posture for both internal and external data. AI innovations also benefit from organisational adaptability and nimbleness, particularly when it comes to new talent.
Now more than ever before, investment management companies need to exercise caution and vigilance when integrating AI technologies. Nevertheless, those that lag in terms of identifying ways to drive innovation and realise efficiency may find themselves falling by the wayside in 2025, with considerable transformation still looming on the horizon. AI technologies such as generative AI and natural language processing are already driving forces, enabling firms to achieve a competitive advantage in the investment management sector. Examining the findings of its recent poll of C-suite executives, Deloitte AI Institute reported that AI is on course to enhance value derived from both human-related skills and technology, with 57% of respondents predicting that generative AI would improve efficiency and productivity and 38% anticipating benefits to existing products and services.
Risks vs Opportunities
With the markets often driven by short-term news cycles, there is always something for traders to worry about. Nevertheless, it is crucial to maintain a long-term perspective, keeping fundamentals front and centre. From geopolitical turmoil in the Middle East and beyond to the US elections, investors experienced considerable unease as 2024 drew to a close. However, a report from JP Morgan suggests that neither should be cause to derail long-term investment plans.
Richard Madigan, who serves as JP Morgan’s chief investment officer, suggests that investors should focus on the ‘knowns’ rather than the unknowns, pointing out that markets tend to notch gains irrespective of who is in office. As Mr Madigan points out, growth of the US GDP has averaged at 3.2% annually over the last 74 years, despite the fact that there have been 10 White House transitions between the Democrats and Republicans over the same time span.
Meanwhile, the S&P has compounded at 9.4% per year, showing solid growth. Richard Madigan suggests that investors should welcome market uncertainty as an opportunity to revisit their goals and plan, enlisting the help of an advisor where necessary to help them make tweaks and reap the benefits of staying invested. In addition, advanced tools can be leveraged to enhance portfolio efficiency, integrating technology and innovation in investment strategies to improve overall portfolio performance.