Oppenheimer logo banner header

2025 Market Outlook

Manager Perspectives

  1. Alpine Capital Research

    Large/All-Cap

    The ACR investment team continues to be concerned with overall U.S. market valuations. We estimate the S&P 500 is selling at 43x trailing cyclically adjusted earnings. The risk of subpar returns at some point is therefore, in our opinion, high. Additionally, we believe it is possible price momentum from economic growth and innovations such as AI could produce strong market gains this year.

  2. Alkeon Capital Management

    Large/All-Cap

    We continue to believe that the overall market offers an unattractive risk/reward as valuations remain extended and the economy is structurally challenged. Importantly, in our view, tail risks including geopolitical uncertainty and unsustainably high deficits are elevated. At the same time, we think opportunities for stock-picking are strong, both on the long and short side.

  3. Atlanta Capital

    Large/All-Cap

    The Russell 1000 Growth posted an average annualized return of nearly 38% the last two years, the highest two year return since the late 90s Tech Bubble. More moderate returns are likely going forward. The fourth quarter of 2024 ended this two year run with a historic rally in low quality and continued concentration in the Magnificent 7. Potential tariffs and geopolitical uncertainty could lead to continued volatility, and 2025 will likely be the year the market broadens.

  4. Electron Capital Partners LLC

    Large/All-Cap

    While volatility is likely to persist in the coming months, particularly as the world awaits further updates from the Fed and new administration’s agenda, we maintain our bullish outlook for the companies that are enabling the energy transition and supplying the infrastructure to meet rising electricity demand.

  5. Lyrical Asset Management

    Large/All-Cap

    Mega-cap growth stocks have dominated since 2022, but 2025 may mark the end of this historic outperformance. Over the last decade, the S&P 500’s gains stemmed from multiple expansions, not faster earnings growth relative to the S&P 500 Equal Weight. With stretched valuations reminiscent of the late 1990s, we believe a reversion appears inevitable. While the timing is uncertain, prior cycles suggest such trends lose steam after two years.

  6. Palestra Capital Management LLC

    Large/All-Cap

    In our view, stock valuations have become stretched, with most measures ranking above the 90th percentile relative to recent history. Moreover, the concentration of market cap in the top few positions is at record levels, and while this poses a risk for index-based investors, we believe significant opportunities may exist to outperform index-based strategies in 2025.

  7. Hotchkis & Wiley

    Small/Mid Cap

    The incoming administration’s pro-business policies, including reshoring, tax cuts, tariff protections, and reduced regulation, are expected to support small-cap companies. These benefits were visible in the one day returns of the Russell 2000 (+6%) versus the S&P 500 (+3%) on the day after the presidential election. While higher labor costs and inflation risks remain, the market appears to be embracing small caps for their economic sensitivity and the fact that the valuations of small caps are low in comparison to large caps – especially mega caps.

  8. Geneva

    Small/Mid Cap

    We continue to believe there is a long-term opportunity for small cap equities relative to large caps, which are trading at their highest valuation premium in 25 years. We believe valuation is a good long-term indicator, and the fundamental backdrop for small cap earnings growth is increasingly favorable – supported by the strengthening U.S. economy, a lower rate environment, improving small business optimism, combined with an environment of deregulation and clarity on tax policy. However, immigration and tariff policies could offset gains. In our view, profitable, well-capitalized companies are best positioned to benefit as market participation expands beyond mega-cap dominance.

  9. Causeway

    International

    We believe non-U.S. markets, trading at historic valuation discounts to the U.S., offer significant upside potential in 2025. Europe, in particular, could benefit from reduced energy prices, corporate investment rebounds, and a potential resolution to the Ukraine conflict. Enterprise adoption of generative AI should drive IT services demand and accelerate growth in advanced processors and memory.

  10. Chautauqua Capital Management

    International

    Central bank updates signaled that monetary policy remains on an easing path, but the pace of rate cuts may be slower or shallower than recently predicted. The Fed has led the way in this regard amid persistent inflation concerns, with its forecast of just two rate cuts in 2025. Additionally, following the presidential election, there has been a growing focus on trade policies and election pledges, which many have viewed as inflationary and possibly leading to higher-for-longer rates. U.S. equities substantially outperformed international equities given this backdrop during the fourth quarter.

  11. Medalist Partners

    Fixed Income

    While traditional banks and lenders continue to face balance sheet issues and are limited in their ability to provide capital, we believe this should result in attractive ongoing opportunities for private credit managers in 2025. We expect the Fed will seek to slowly reduce interest rates while the Trump administration’s policies should support corporate earnings and the economy, providing tailwinds for credit quality. While elevated inflation risk remains, we believe asset-based lending should outperform given enhanced current yield and the security of cash flowing assets.

  12. Golub Capital

    Diversifying

    We expect continuing strong performance from private equity-backed companies, as most of these companies are adapting well to the challenge of higher interest rates. Additionally, we anticipate continuing increases in M&A activity, especially in the middle market, with our pipeline today being meaningfully stronger than it was a year ago. We also believe that investors are well served to focus on resilient strategies designed to perform well across a wide range of scenarios.

  13. JLL

    Diversifying

    Real estate transaction volumes are expected to recover slowly, with liquidity improving 
    but selling appetite and buying capital remaining below average. Index returns should trend higher, driven by income, while industrial assets are poised to outperform apartments due to stronger fundamentals and a shrinking supply pipeline. Office investments may reemerge as opportunities for higher returns despite elevated risks. Climate change and rental affordability issues heighten the risk of local regulations affecting investment performance. Navigating these local dynamics will become increasingly critical, given the limited national policy in these areas.

  14. The Merger Fund

    Diversifying

    As we step into 2025, we believe the M&A landscape is set for a remarkable transformation driven by newfound political and economic stability. The decisive pro-business outcome in the U.S. elections has instilled confidence among businesses and investors, fostering a more predictable and welcoming environment for mergers and acquisitions. With interest rates and inflation projected to decline, we believe the financial landscape is becoming increasingly favorable for transaction activity, encouraging more businesses to pursue M&A opportunities. In our view, pro-business initiatives, such as corporate tax cuts and streamlined regulatory processes, are expected to further enhance the M&A climate.

  15. Nuveen

    Fixed Income

    Interest rates continue to play a major role in shaping public markets. Listed real assets like REITs and infrastructure are poised to benefit from stable or falling rates, as they did in Q3 2024 when they outperformed broader equities by a wide margin. Looking ahead, the strong U.S. economy and inflation concerns from the new administration have raised expectations for higher interest rates to stick around longer. While this has slowed recent gains, falling inflation, attractive valuations, and stronger fundamentals could set the stage for these assets to perform well in 2025. REITs appear to be early cycle and may benefit from trends like growing demand for data centers, improving supply in areas like multi-family housing, and a soft landing for the economy. Meanwhile, infrastructure offers steady, inflation-resistant returns and stands to gain from the rising need for more power driven by advancements like artificial intelligence.

  16. TIG

    Diversifying

    We are optimistic about the merger arbitrage landscape in 2025 due to an anticipated pro-business environment and regulatory reforms, which are likely to provide process clarity, thereby boosting deal flow and instilling confidence in dealmakers. Additionally, we believe market inefficiencies and mispriced risks, amid the continuation of attractive spreads, may  create opportunities for investors.