Favoured investments among the world's top financiers include equities, gold, Chinese markets, artificial intelligence, and various global sectors.
Fund Managers Remain Optimistic Amid Geopolitical Risks and Upcoming U.S. Presidential Election
In a surprising turn of events, fund managers across the globe are maintaining a positive outlook, despite the looming geopolitical risks and the upcoming U.S. presidential election. This optimism stems from the belief that the worst of the economic shocks may have passed, and that there are still opportunities for risk-on investments amid persistent market volatility and inflation dynamics.
According to a major PGIM survey conducted in 2024, more than half of institutional investors rate geopolitical risk as their top concern. However, about one-third still plan to increase allocations to higher-risk investments in 2025, reflecting a continued appetite for risk despite global uncertainties like U.S.-China tensions and military conflicts in places such as the Middle East.
The investment focus of these fund managers is on balance. They are maintaining defensive stability in sectors such as utilities and healthcare that show resilience amid volatility, while simultaneously pursuing tactical growth opportunities in international markets and high-yield assets. Hedge funds also see dynamic market environments as sources of opportunity for varied strategies despite heightened risks.
The ongoing geopolitical flashpoints, such as Taiwan Strait tensions, receive close monitoring. However, investors are becoming less worried about other risks like recession or inflation relative to geopolitical risks. This balanced approach allows them to continue risk-on positioning despite the backdrop of geopolitical tensions and looming U.S. elections.
Other factors contributing to this optimism include the interest rate turn in the U.S. and expectations of a soft landing for the economy. The U.S. presidential election is expected to take place within a week, and its outcome could significantly influence the economic and geopolitical course of the world's largest economy.
Meanwhile, in other news, a billion-dollar takeover raises hopes for a lithium comeback, while an electric car maker posted more profit than expected in the last quarter. The tech-heavy "Magnificent Seven" continues to attract fund managers, with expectations of continued bets on rising prices. Lab-created diamonds are shaking up the market, presenting challenges and opportunities for the industry.
In contrast, SAP is facing a significant challenge despite being on a long-term growth path. The French company Sanofi gets the green light for the sale of the Opella division, but under tough conditions. The survey by Bank of America reveals that fund managers are optimistic despite strong stock markets and geopolitical risks, and stocks remain the preferred investment class for fund managers, while bonds have lost significant appeal.
Lastly, it's important to note that other crises, such as those in Ukraine and the Middle East, are ongoing. The uncertainty about the election result is high, but fund managers are adapting their strategies to the geopolitical environment rather than retreating from risk altogether. This resilience and adaptability are key to their continued success in the dynamic global market.
- Fund managers, amidst the geopolitical tensions and the upcoming U.S. presidential election, are exploring new avenues of investing, particularly in technology, with an increased focus on artificial-intelligence and high-yield assets.
- Despite the looming geopolitical risks and uncertainties, fund managers are incorporating advanced technologies like artificial-intelligence into their finance strategies, viewing it as a vital tool to navigate the volatile market and seek opportunities for growth.
