Displaying items by tag: equities

Markets entered 2025 on strong footing but were quickly rattled by earlier-than-expected U.S. tariff actions, delaying anticipated rate cuts and fueling volatility across equities, Treasuries, and currencies. AllianceBernstein expects moderate—not recessionary—growth in the second half, with fiscal and trade policy, Fed actions, and geopolitics serving as key macro drivers. 

Credit markets have shown resilience, and despite tighter spreads, elevated yields make high-quality issuers—particularly BB-rated bonds—attractive for income and risk management. With inflation expected to peak by the third quarter, the firm favors short-to-intermediate bond maturities to balance yield opportunities against interest-rate risk. 

Equity markets, while volatile in early 2025, have since broadened beyond U.S. tech leaders to global and value-oriented sectors, especially in Europe where banks and dividend payers stand out. 

Finsum: Multi-asset income strategies as well-positioned for this uncertain backdrop, combining yield, diversification, and adaptability amid shifting policy and market conditions.

Technology and Communication Services stocks continue to dominate markets in 2025, gaining 23% and 25% respectively—well above the S&P 500’s 15% return. Together, these sectors now account for nearly 45% of the S&P 500’s market cap, with Broadcom, NVIDIA, and Alphabet leading gains among the “Magnificent Seven.” 

Despite volatility earlier in the year due to competitive AI platforms like DeepSeek, resilient consumer demand and strong corporate profits have kept indexes at record highs. Analysts from U.S. Bank Asset Management Group note that AI and cloud computing remain major growth drivers, even as investors scrutinize valuations and capital expenditures. 

While elevated prices could leave tech stocks vulnerable to earnings slowdowns, experts see continued upside as innovation fuels productivity and structural growth. 

Finsum: Technology remains the market’s core engine, volatile yet essential for long-term investment performance.

Large-cap blend funds, core holdings that mirror the U.S. stock market, have posted strong results, returning 15.84% over the past year, 22.50% annually over three years, and 14.81% over five. Morningstar data identified 15 standout funds with top-quartile returns across one-, three-, and five-year periods, including American Funds Fundamental Investors, AQR Large Cap Multi-Style Fund, and Vanguard 500 Index Fund. 

The American Funds Fundamental Investors fund rose 23% in the past year, boosted by global exposure and a refreshed management team, while The Investment Company of America fund gained 22.25% with a balanced focus on dividend growth and capital appreciation. 

AQR’s Large Cap Multi-Style Fund outperformed its peers with a 23.52% annual gain, leveraging value, momentum, and quality factors to manage market sensitivity efficiently. 

Finsum: These funds demonstrate that disciplined diversification, data-driven strategy, and cost efficiency continue to drive superior long-term performance.

Bank of America is urging investors to focus on high-quality value stocks as markets show signs of overheating and sentiment shifts toward more defensive strategies. In its Small/Mid Cap Factors report, the bank noted that while small-cap value stocks lagged in the third quarter, they are now positioned for a rebound. 

Analysts pointed to several signals suggesting stronger prospects for value stocks, including the U.S. Regime Indicator’s recent shift to a “Recovery” phase, historically favorable for value leadership.

The report also emphasized that value stocks tend to outperform during Federal Reserve rate-cut cycles, similar to the current environment. Bank of America highlighted that value has started to outperform in mid caps, even as growth stocks continue to rally, noting that the “low-quality rally is in its later innings.” 

Finsum: Turning to fundamentals could be the play with rate cuts on the horizon and an shaky economy. 

Global investors are increasingly reallocating away from U.S. equities, even as Wall Street continues to notch record highs. Fund-flow data from Société Générale and EPFR show record inflows into global equity funds that exclude U.S. stocks, signaling a push for broader diversification. 

Europe and emerging markets have benefited most from this trend, with European equity products seeing record inflows this year. Currency effects and heightened U.S. policy risks under the Trump administration have also encouraged investors to look abroad. 

While many acknowledge the U.S. remains the world’s deepest and most dynamic market, its high valuations and narrow leadership have amplified concentration risks. 

Finsum: Portfolio managers showed a more globally balanced approach, blending exposure to the U.S. with selectively priced opportunities overseas.