Whether optimistic or cautious about next year’s markets and economy, the general consensus remains that of shifting tides in 2025. Neuberger Berman discussed the five key themes they’re watching in the new year in a recent outlook. Among those are a broadening of equity performance and a need for active management within equities.
The firm believes that next year will bring with it above-trend growth. This is predicated upon central banks curtailing inflation to acceptable levels, thereby allowing the U.S. — and global — economy to grow. Such growth benefits a number of asset classes, but particularly that of equities.
“Deregulation, business-friendly policies, moderating inflation and lower rates may allow a broadening of earnings growth and price performance,” the firm noted. Such broadening would likely benefit small-caps, value stocks, and even cyclical sectors.
Meanwhile, Neuberger Berman also anticipates a slowing of mega-cap technology stocks. In particular, capital spending in pursuit of AI buildout may take an increasing toll on companies while possible benefits trickle downstream to the greater benefit of users, according to Shannon Saccocia, CFA, CIO-Private Wealth and Neuberger Berman.
Active Management a Potential Boon in 2025 Equity Markets
In such an environment, investors can anticipate greater opportunities, but also greater dispersion performance. It’s the type of environment that favors actively managed strategies, particularly within equities. And should 2025 prove to be as difficult to predict as the last handful of years, active strategies could prove a boon in periods of volatility.
Image source: Neuberger Berman
See also: The Case for Active Investing in 2025
“This may be a ‘buy beta’ story until the end of 2024,” explained Joseph Amato, president and CIO, Equities at Neuberger Berman. Heading into next year, “dispersion should be higher and active management will be critical, however 2025 turns out.”
Neuberger Berman offers a range of actively managed ETFs. Equity investors would do well to consider the Neuberger Berman Core Equity ETF (NBCR) with its largely sector-neutral portfolio of high-quality companies. The firm also offers the Neuberger Berman Small-Mid Cap ETF (NBSM), which invests in small- and midcap companies with elevated, sustainable growth potential.
Stay tuned for a discussion of Neuberger Berman’s outlook for 2025 bond markets.
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