Volatility Unleashed: A Shift Towards Active Management in 2025
Investors are increasingly turning to active strategies amid higher interest rates, economic volatility, and shifting market dynamics.
Navigating the Tide of Change
In a financial landscape marked by uncertainty, investors are recalibrating their strategies. With higher interest rates escalating the debt-servicing burdens of the globe’s heavyweight economies, and economic growth on a cautious crawl, the year 2025 beckons a more active approach to investment management. According to IOL, volatility is not just a buzzword—it’s the new market reality.
Unfolding Market Sentiments
The Schroders Global Investor Insights Survey shines a light on the zeitgeist of 2025. Pulled from the minds of 1,000 investment professionals worldwide, this survey portrays a vivid picture of investor confidence, or lack thereof, propelled by the US trade policies that took a sharp turn on the so-called “Liberation Day.” This event resonated through the markets, positioning US trade and tariff policies at the pinnacle of investor concern, overshadowed only by economic downturn and inflation.
Active Resilience Takes Center Stage
“Portfolio resilience” now seems synonymous with opportunity-seeking amidst market tremors. While some might shy away, 62% of investors are embracing risk, spurred by the call of dynamic opportunities. In this evolving theatre, actively managed strategies are hailed as lifelines, adept at not just surviving but thriving in a volatile sea.
The Relevance of Active Management
It’s more than just returns; it’s about seizing them wherever they rear their heads. With a proclivity for deep specialist knowledge, active management is seen as the compass in today’s economic wilderness. Johanna Kyrklund, spokesperson for Schroders, underscores this belief, emphasizing the shift towards structurally higher interest rates and the uncertainties they bring.
Betting on Diversification
As the investment landscape evolves, so do asset allocation trends. Public and private equities float to the surface as twin pillars of return prospects. Yet, there’s a fascinating undercurrent—private debt and credit alternatives are emerging as vital components in an investor’s toolkit. According to Michelle Russell-Dowe of Schroders Capital, these provide a “diversifying and flexible income” solution, essential in today’s fiscal high seas.
Looking Forward
The essence of 2025 might well be summed up in a single word: “adaptation.” With so many eyes on the horizon, anticipating and adapting to ever-shifting market conditions is more than prudent—it’s essential. As stated in IOL, blending the art and science of active management holds promise amid the dynamic and unpredictable financial panorama we witness today.
By prioritizing resilience over mere risk aversion, the road ahead may appear stormy, but rest assured, it’s one navigated with purpose and precision.