Q&A

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Europe

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What’s the most important investment call investors are going to have to make over the coming year?

What to do with all this cash.

There is more than $6.5tn sitting in US money market funds. Cash rates are likely to continue to decline in 2025, so investors will need to decide where to invest this liquidity. Bond yields are still attractive but credit spreads are extremely tight and many governments around the world are highly indebted. At the same time, equity indices are flirting with all-time highs, and valuations – in particular in the US – are very elevated by historical standards. As such, it will likely be a difficult decision. In a world that remains highly uncertain, a disciplined approach to asset allocation is probably the best answer to this question.