2025: a year when diversification matters

We explore four key questions for investors in 2025 and why diversification might be the answer.

Key takeaways
- With markets seeking clarity about US policies under Donald Trump, as well as the path of interest rates and the fortunes of the US and Chinese economies, we think a diversified approach to asset allocation can help to manage uncertainties ahead.
- Building a widely diversified portfolio, including assets such as gold, private markets or catastrophe bonds, and staying invested through market volatility can help to mitigate risks and capture opportunities.
- Some of the assets we favour in the current environment include US small caps for their attractive valuations and support from fiscal policies, the Japanese yen, given its safe-haven asset qualities, and longer-term opportunities in China in areas like artificial intelligence and big data.