Bob Homan

As is always the case, the most crucial decision is the one made at the highest level of top-down asset allocation. That question is: what is your strategy for managing the bond-to-stock ratio? 

The same will be true in 2025, with numerous factors affecting this decision. We typically refrain from considering geopolitical factors in our decision-making process but this will be a key consideration in 2025. What is the likelihood of Republicans pursuing a more protectionist stance on imports and limiting immigration in the US? To what extent will this have an inflationary impact and drive up long-term interest rates? In light of these considerations, what is the attractiveness of bonds, and how should duration be managed? Is the current valuation of equities sustainable? To what extent will import initiatives extend to Europe, given the economic challenges currently facing that bloc? 

This affects your regional choices. 

Currently, we maintain an overweight position in the US. Within equities, the most critical decision is growth versus value. Despite the robust price appreciation of growth sectors, such as IT and communication services, the decision to retain these is less challenging for us at this time. As always, but now more than ever, there are significant uncertainties. It will be an interesting year where we will likely be quite active with asset allocation changes across all levels.