The new year is just weeks away, and after a year of market narrative upheaval, investors may be looking forward to refreshing portfolios. One area that may offer an opportunity to shuffle portfolios may be global markets. Digging into the 2025 global market outlook, investors may find some segments that offer particularly attractive investments, with an active international equities ETF like TOUS available as a route in.
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What about the 2025 global market outlook merits a closer look? Key regions are seeing improving trends for inflation and monetary policy that speak to diversifying abroad. For example, in the Eurozone, the European Central Bank (ECB) could deliver at least 50 basis points (bps) worth of rate cuts in the first quarter, per T. Rowe Price analysis. The People’s Bank of China (PBOC), too, appears likely to provide further cuts according to that report.
Looking at inflation, while still stubbornly clinging to a few points in emerging markets regions like Latin America, it has already notably decreased from post-pandemic highs. Meanwhile, in Japan, the fight focuses on the risk that inflation might fall “below” the central bank’s target. Improving wages, however, may be poised to push back on that trend.
What does that mean, then, for investor portfolios? According to T. Rowe Price’s head of international equity, Justin Thomson, 2025 may mark a new market period.
“We are emerging from a highly unusual period in which one market (the U.S.) and one sector (technology) dominated returns. Within that sector, a handful of exceptional firms drove the large bulk of those returns,” Thomson writes. “This dominance has skewed investor positioning and valuations: Many investor portfolios are heavily exposed to U.S. equities while virtually every sector in non‑U.S. equities is currently cheaper than its U.S. equivalent.”
Investors, then, may consider a strategy like the T. Rowe Price International Equity ETF (TOUS) as a compelling route into diversification and upside abroad. The fund actively invests in firms that have any capitalization. Charging just a 50 bps fee, the active ETF looks for approximately 150 attractively priced firms, primarily in ex-U.S. developed markets. Leaning on T. Rowe Price’s fundamental research capabilities, the strategy has returned 23.6% over the last year. Taken together, the new year could see TOUS make a compelling case for a new global market outlook in 2025.
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