Navigating Investment Themes for 2025

Navigating Investment Themes for 2025

Hi, my name is Dave Schassler. I'm the head of multi-asset solutions here at VanEck. We manage models. We manage broad asset allocation models, but we also offer more specific thematic models.

Today we're going to talk about what happened in 2024. What worked for us, what didn't. Then we're going to talk about 2025. We're going to talk about what to expect. Each individual asset class, risks and opportunities.

Major Investment Themes in 2024

So let's talk about 2024. In 2024, we had two major investment themes. The first was extreme innovation. Yes, we're talking about AI. The second was financial excess, financial excess from the government. Big spending, big deficits, big money supply. Those were our two major investment themes.

Let's start with the AI side. We accessed that through investments in technology companies. That worked out really well. And we also protected against financial excess from the government through investments in both Bitcoin and investments in gold. That also worked out well. So in large, those were our two major investment themes. That's how we accessed it.

How to Position for 2025

So let's talk about how we're positioned for 2025.
2025, from our perspective, those themes are very much intact.

We think AI, that trend accelerates. It accelerates through the adoption. That adoption is going to drive productivity, eventually going to drive economic growth. So we're really still excited about AI.

We want you to gain exposure to technology companies. We think it's going to broaden out. So 2024 was largely about the companies that were the beneficiaries of CapEx spending. We think those that are actually spending that money will start to receive the benefits. And as adoption of AI broadens out, so will the benefits of AI. So continue to stay overweight in technology.

In 2025, in regards to inflation, expect more of the same. There's not a credible path to reducing inflation by correcting the issues that driving inflation. So we think that investors should experience a period of prolonged inflation. We don't see a major second wave happening. 

In addition, we want people to lean into real assets if they're not already. So we'd like in a period of financial excess, the assets that are favored are those with scarcity. So think about assets like gold. Think about assets like Bitcoin. Those are your primary assets during a period of financial excess.

Asset Class Ranking

Let's talk about asset class ranking. So I'm going to rank the asset classes that we think are going to perform best from top to bottom in 2025.

So starting out, we think Bitcoin will lead other asset classes in 2025. And that's for two reasons. The first, it ties in very heavily to our scarcity argument. So it is a store of value asset. It is digital gold in our opinion. So think about it as gold 2.0. That plus continued adoption, we think, will continue to drive Bitcoin prices higher. So we think that will be the top performing asset class in 2025.

The second, stocks. We think stocks are going to continue to benefit from this big innovation wave that we're seeing right now. I said it before, I'll say it again. This innovation wave is equally as big as that of the internet. And we think it's going to drive productivity, eventually drive economic activity. That's why we're bullish on stocks, specifically technology stocks.

Third is real assets. Real assets are your traditional store value assets. We're talking about gold bullion. We're talking about commodities, natural resource equities. We think gold particularly is going to be the third best performing asset class followed by stocks and Bitcoin.

And lastly, bonds, we're least bullish on that asset class. Expectation from our perspective, negative real returns at best because persistently elevated inflation should push yields up as it pushes yields up that pushes bond prices down that with persistently elevated inflation we think you're going to get a negative real return.

Tips to Protect Against Volatility

Let's talk about risks in 2025. There are clear risks going into 2025. We just came off an awesome year for the stock market. When I look at the individual companies, I see signs of froth. I see small companies that don't make a lot of money or make no money at all that performed tremendously lately.

So when I see signs of froth, it's clear to me that we're in an elevated risk regime. I don't think making money in 2025 will be as easy as it was in 2024.

I think you've got to be more selective. So I expect more volatility, but I still think it's going to be a good year for investors. Just not as easy as 2024.

So to wrap it all up, there's a lot to be optimistic about, but we want you to balance that optimism with diversification. Now is a great time to be diversified. Be diversified across stocks, bonds, real assets, and digital assets. We think overweight stocks, real assets, and digital assets over fixed income, but we want you to be diversified.