A surge in annuity sales over the past few years has been driven by retiring baby boomers and elevated interest rates, with total sales surpassing $1.1 trillion between 2022 and 2024. Fixed annuities, which function similarly to certificates of deposit but typically offer higher returns, have been particularly popular, with some rates reaching 5.85% in early 2025. 

However, as interest rates begin to decline, the appeal of these straightforward products may diminish, prompting investors to explore alternatives like fixed-index annuities. These annuities link returns to market performance while guaranteeing principal protection, making them an attractive option in uncertain economic conditions. 

Despite their benefits, fixed-index annuities come with complexities, including caps on returns and intricate contract terms that require careful scrutiny. As the market evolves, investors should prioritize transparency and fully understand their options before committing to an annuity in 2025.

Finsum: With the potential of interest rates staying flat we could see more investment in index annuities in 2025. 

Actively managed U.S. bond funds saw a resurgence in 2024, drawing in substantial investment after two years of outflows, with industry leaders like Pacific Investment Management Co. leading the charge. Morningstar Direct data revealed that six of the ten bond mutual funds with the highest net inflows were actively managed, pulling in a combined $74 billion.

In total, actively managed bond funds attracted $261 billion over the year, the highest level since 2021, despite a bond market selloff triggered by the Federal Reserve’s first rate cut in four years. Core and income-focused bond strategies were the biggest winners, appealing to investors seeking stability in an uncertain interest-rate landscape. 

With Treasury yields hovering near 5% and credit spreads historically tight, investors are weighing the risks and rewards of bonds versus other asset classes. While the Pimco Income Fund remained the largest actively managed bond fund with $26.8 billion in inflows, the Vanguard Total Bond Market Index Fund led all funds with $33.4 billion. 

Finsum: Uncertainty around fiscal policy and potential inflationary pressures under the new administration could shape how bond markets evolve in 2025.

Donald Trump has promised to accelerate U.S. economic growth, but the economy already surged through 2024, likely ending the year with a 3% annualized GDP gain in the fourth quarter, according to the Atlanta Fed’s GDPNow. If accurate, annual growth for 2024 would range from 2.4% to 2.7%, a rate comparable to pre-pandemic levels but unexpected in the post-pandemic era. 

This surprising strength is credited to two main drivers: an expanding population fueled by increased immigration and a notable boost in productivity, partially attributed to advancements in technology like AI. Yet, challenges remain, including persistent inflation, elevated interest rates that have slowed home and vehicle sales, and a weaker hiring environment despite low unemployment. 

Businesses are optimistic about Trump’s plans to cut taxes, streamline regulations, and reduce energy costs, though his proposals for higher tariffs and mass deportations raise fears of higher material and labor costs. 

Finsum: The outlook is upbeat, with early indicators of 2025 showing confidence, underscoring the nation’s resurgence as a global economic leader.

Mike Bailey, director of research at FBB Capital Partners, shared his outlook on large-cap stocks during an appearance on CNBC. Bailey expressed optimism about the U.S. economic outlook for 2025 and beyond, highlighting job growth and strong macroeconomic conditions as key factors. 

He emphasized that large-cap companies are better positioned than small caps to deliver consistent long-term earnings growth and exceed expectations. Three of the large-cap stocks have seen significant gains due to favorable market conditions and growth prospects. 

The selection of these stocks, all with market capitalizations exceeding $10 billion, was based on their top performance over the 30 days ending January 22, 2025.  Among the standouts are SoFi Technologies, United Airlines, and Rocket Lab, which benefited from strong earnings, strategic partnerships, and growth in innovative sectors, cementing their positions as key players in their respective industries.

Finsum: Finding large caps without technology could be the short term play with all of the tech volatility. 

Cresset, a $60 billion RIA, has secured a $150 million minority investment from Constellation Wealth Capital, an alternative asset manager specializing in long-term investments in wealth management firms and multi-family offices. Constellation now holds less than a 10% equity stake, with employees and clients retaining majority ownership, ensuring the firm's alignment with client priorities. 

The funds will support Cresset’s efforts to enhance its platform, technology, and talent recruitment initiatives. Karl Heckenberg, president of Constellation, praised Cresset’s commitment to client success and shared their "100-year vision" for sustained growth and innovation.

 Cresset’s co-founder, Avy Stein, described the investment as a strong endorsement of the firm’s business model and growth strategy. He also welcomed the Constellation partnership as a way to further transform how clients experience wealth management.

Finsum: This investment into technology is a reflection of the growing importance of innovation in advisors decision making processes.