Traditionally, at the end of the calendar year, global investment banks publish their annual economic and investment forecasts for the upcoming year. These reports serve as a roadmap for many investors in international stock assets. An industry standard is forecasting the dynamics of the most well-known stock index, the S&P 500.
We reviewed reports from 25 banks and used artificial intelligence to derive a consensus recommendation for an investment portfolio in 2025. The analysis focuses on global assets, with the Ukrainian context not being considered.
Optimal Investment Portfolio for 2025
An investment portfolio is a collection of assets that can include various types of securities, real estate, and other alternative investments aimed at achieving an investor’s financial goals. Global investment banks foresee the largest share of the model portfolio for 2025 being allocated to equities. The share of stocks stands at 56%, including investments in small and mid-cap companies in the U.S., dividend-paying corporations, European banks, and stock indices in India and Japan. Popular investment choices in 2025 are expected to be the healthcare sector, industrial automation, and renewable energy. Many experts predict continued price growth for gold, silver, and copper.
Global investment banks also provide recommendations regarding bonds from emerging markets and high-credit-rated corporate bonds (Investment Grade). However, the bond share in the model portfolio is only 17%, according to global analysts.
Overall, the recommended investment portfolio allocation for 2025, based on these reports, is as follows:
- Stocks: 56%
- Bonds: 17%
- Real Estate: 10%
- Alternative Investments: 17%
Performance of Key Assets in 2024
To better understand these forecasts, it is useful to recall the performance of major assets in 2024:
- S&P 500 (U.S.): +23.3%
- STOXX 600 (Europe): +6.1%
- Hang Seng (China): +17.6%
- Nikkei 250 (Japan): +18.1%
Other key assets:
- Gold: +26.6%
- Silver: +20.9%
- Copper: +10.1%
- 10-year U.S. Treasury Bonds: -3.3%
- U.S. Real Estate: +0.8%
- Bitcoin: +117.6%
Overall, 2024 was an excellent year for financial assets—a year of records, high valuations, and market concentration. It was also a year of global elections, geopolitical tensions, and declining interest rates.
Analysis of Analyst Recommendations
After deriving the model portfolio structure using ChatGPT, a logical question arises: Should investors allocate 56% or more of their portfolio to stocks? The stock market has demonstrated exceptionally high returns over the past two years. The S&P 500 index has risen by 55% over this period, while some individual stocks have delivered tenfold returns.
Historical data from the U.S. market shows that the long-term average annual return of the S&P 500 is 8.2%. Currently, the index is growing at a much faster rate. Another concern is the concentration of the index itself. The top 10 companies now account for 39% of the index (compared to 27% before the dot-com bubble in 2000). Additionally, the valuation of most U.S. public companies is at record levels, with further growth depending significantly on future earnings projections. Any deterioration in economic conditions could negatively impact stock market indices.
Therefore, we believe it is more rational in 2025 to maintain an equity allocation of 30–40% and adopt a more selective approach when choosing indices, funds, or individual stocks. A 40–50% allocation to bonds is a balanced choice, considering the active cycle of interest rate cuts in many countries.
Regarding real estate and alternative assets, investment banks’ recommendations appear well-founded. A 10% allocation to real estate funds and a mix of investments in gold, silver, cryptocurrencies, or Venture Capital/Private Equity funds provide adequate portfolio diversification. Naturally, adjusting both the instruments and their proportions depends on the investor’s risk tolerance, expected returns, and available capital.
Overall, global investment banks predict continued growth in financial markets throughout 2025. In future reports, we will delve deeper into asset-specific recommendations and potential risks for the year.
Important Notice
The information in this material is an analysis of third-party investment recommendations and should not serve as the basis for investment decisions. The portfolio structure itself was developed using ChatGPT algorithms. The author expresses personal opinions regarding the model portfolio structure based on publicly available information, which may not necessarily align with the views of Capital Times as a whole.
