Solving for 2025
Webinar Replay | 5 Key Themes to Navigate the Markets
Webinar Replay | 5 Key Themes to Navigate the Markets
Five for 2025
Our senior investment leaders discuss their market and investment themes for the coming year.
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Macro
Going for Goldilocks
1. A Year of Above-Trend Growth
While the politics may change, industrial policy aimed at influencing domestic production patterns will continue, whether achieved via government spending and investment, tax policy, trade policy, deregulation or other means. If inflation can be contained—and we think it can—central banks can stand aside and allow economies to run a little warm. That is a recipe for above-trend U.S. GDP growth, which could drag some of the world’s other economies with it. The debt and deficit implications, and the question of whether capital is being well allocated, may surprise investors by being manageable concerns in 2025.
2. Expanding the Soft Landing by Broadening Real Income Growth
The detrimental impact of high inflation on lower-income consumers and small businesses has been an important driver of this year’s political uncertainty. Countries and governments that deliver moderate inflation and broader participation in positive real wage growth and positive real revenue growth will increasingly come to define success, visible in data points such as higher consumer confidence, political approval ratings and GDP growth rates. While it remains to be seen whether specific policy mixes can achieve this, we see evidence that the incoming U.S. administration at least recognizes the objective, and active industrial policy is evidence of growing recognition elsewhere.The Soaring Cost of Staples Over the Past Four Years
Consumer Price Index rises, October 2020 to October 2024
Consumer Price Index rises, October 2020 to October 2024
Equities
The Market Opportunity is More Than Seven Stocks
Opportunity in Value Stocks, Small Caps and Non-U.S. Markets
Five-year annualized price appreciation and current valuation
Five-year annualized price appreciation and current valuation
3. The Stage is Set for Broadening Equity Market Performance
Deregulation, business-friendly policies, moderating inflation and lower rates may allow a broadening of earnings growth and price performance. At the same time, mega-cap technology growth rates are likely to decelerate and normalize as capital expenditure ramps up. Value and small-cap stocks, and sectors such as financials and industrials, could begin to catch up with mega-cap technology. Non-U.S. markets could perform more strongly on higher global growth and lower commodity prices. Relative valuations, as well as fundamentals, should provide support for this theme.
Fixed Income
Fed Up With Fed-Watching
4. Bond Markets Will Focus on Fiscal Rather than Monetary Policy
For more than two years, bond markets have been dominated by inflation data and the responses of central banks. We think a reacceleration of inflation can be avoided next year, and that central banks will settle into the dull routine of debating where the neutral rate sits. Bond investors will likely shift focus to the growth outlook through most of 2025, and possibly deficits and the term-premium question late in the year and into 2026. The result will be moderately steeper yield curves and a migration of bond market volatility from the short end of the curve to the intermediate and long parts.
Are High-Grade Corporate Bonds Becoming the New Safe Haven?
U.S. Treasury and corporate bonds, yields and credit spread, November 2023 to November 2024
U.S. Treasury and corporate bonds, yields and credit spread, November 2023 to November 2024
Alternatives
The Art of the Deal
M&A Fell To a 20-Year Low This Year
Number and value of worldwide merger and acquisition transactions, 1985 to 2024
Number and value of worldwide merger and acquisition transactions, 1985 to 2024
5. Mergers and Acquisitions Are Set to Surge
Numerous factors are aligning to release a pent-up torrent of corporate dealmaking: above-trend growth; buoyant public equity market valuations; a more stable inflation and central bank outlook; the return of banks to the leveraged lending market; declining rates and tight credit spreads; and, perhaps most importantly, an expected change in regulatory stance in the U.S. That said, private equity secondaries and co-investments will continue to flourish as liquidity is still required to work through a huge backlog of mature investments, and it will remain challenging to raise new primary funds. Event-driven hedge fund strategies will benefit from a big new opportunity set.
Roundtable Discussion
Going for Goldilocks
As 2024 ended, the leaders of our investment platforms gathered to talk about the evolution of the investment environment over the past 12 months and the key themes they anticipate for 2025.
Joseph V. Amato
Joseph V. Amato serves as President of Neuberger Berman Group LLC and Chief Investment Officer of Equities. He is a member of the firm’s Board of Directors and its Audit Committee. His responsibilities also include overseeing the firm’s Fixed Income and hedge fund businesses.
Previously, Joe served as Lehman Brothers’ Global Head of Asset Management and Head of its Neuberger Berman subsidiary, beginning in April 2006. From 1996 through 2006, Joe held senior level positions within Lehman Brothers’ Capital Markets business, serving as Global Head of Equity Research for the majority of that time. Joe joined Lehman Brothers in 1994 as Head of High Yield Research. Prior to joining Lehman Brothers, Joe spent ten years at Kidder Peabody, ultimately as head of High Yield Research.
He received his BS from Georgetown University and is a member of the University’s Board of Directors. He currently serves on the McDonough School of Business Board of Advisors and the Psaros Center for Financial Markets and Policy Board of Advisors. He is Co-Chair of the New York City Board of Advisors of Teach for America, a national non-profit organization focused on public education reform. He is also a Board Member of KIPP NJ, a charter school network based in Newark, NJ, which focuses on educational equity.
Ashok Bhatia, CFA
Ashok Bhatia, CFA, Managing Director, joined the firm in 2017. Ashok is Co-Chief Investment Officer for Fixed Income, co-Head of Multi-Sector Fixed Income, and a member of Neuberger Berman's Partnership and Asset Allocation Committees and Fixed Income's Investment Strategy Committee. Previously, Ashok has held senior investment and leadership positions in several asset management firms and hedge funds, including Wells Fargo Asset Management, Balyasny Asset Management and Stark Investments. Ashok has had investment responsibilities across global fixed income and currency markets. Ashok began his career in 1993 as an investment analyst at Morgan Stanley. Ashok received a BA with high honors in Economics from the University of Michigan, Ann Arbor, and an MBA with high honors from the University of Chicago. He has been awarded the Chartered Financial Analyst designation.
As previously announced, Brad Tank will transition from Co-CIO of Fixed Income to a Senior Advisor role at the end of 2024, at which time Ashok Bhatia will assume the role of sole CIO of Fixed Income.
Jeff Blazek, CFA
Jeff Blazek, CFA and Managing Director, is Multi-Asset Co-Chief Investment Officer. Jeff joined Neuberger Berman in 2024 and, along with Multi-Asset Co-CIO, Erik Knutzen, is responsible for co-leading the firm’s multi-asset investment activity, driving portfolio construction and developing investment outlooks. He serves as co-chair of the firm's Asset Allocation Committee and Public Private Investment Committee, and he is also a member of the Investment Risk Committee. Previously, Jeff spent over 12 years at Cambridge Associates, having founded and led the firm’s New York City office, and serving as co-leader of the Endowment & Foundation practice and as Head of the Healthcare practice. Jeff has also worked in-house at two investment offices: Managing Director at New York-Presbyterian Hospital for three years, and Portfolio Manager at Teacher Retirement System of Texas for five years. Jeff has over 25 years of investment experience. Jeff holds a Bachelor of Business Administration and Master of Professional Accounting from University of Texas at Austin. Jeff serves on the BBA Advisory Board for UT’s McComb School of Business.
Erik L. Knutzen, CFA, CAIA
Erik L. Knutzen, CFA, CAIA and Managing Director, is Multi-Asset Co-Chief Investment Officer. Erik joined in 2014 and, along with Co-Chief Investment Officer of Multi-Asset Jeff Blazek, is responsible for leading the management of multi-asset portfolios, driving the asset allocation process on a firm-wide level, as well as engaging with clients on strategic partnerships and customized multi-asset solutions. Erik Co-Chairs the firm's Asset Allocation Committee and Public-Private Investment Committee and is a member of the firm's ESG Committee. Previously, Erik was with NEPC, LLC where he served as Chief Investment Officer since 2008. As CIO, he oversaw dedicated research teams focused on Alternative Investments, Traditional Strategies and Asset Allocation for NEPC’s client base with, collectively, more than $800 billion in assets under advisement. He has over 30 years of experience in the financial services industry. Erik holds an MBA from Harvard Business School and a BA from Williams College. He has been awarded the Chartered Financial Analyst and Chartered Alternative Investment Analyst designations. Erik is an Associate Editor of the Journal of Investing, is on the Investment Committee of the Massachusetts Audubon Society, and on the Board of Directors of the charity Start Small Think Big.
Shannon L. Saccocia, CFA
Shannon Saccocia, CFA, is the Chief Investment Officer of NB Private Wealth ("NBPW"), a division of Neuberger Berman. In her role, Ms. Saccocia works closely with investment leadership across Neuberger Berman to establish market views, asset allocation and portfolio recommendations tailored specifically for NBPW clients. She is also responsible for leading the NBPW investment platform to enable comprehensive delivery of the firm's investment capabilities. Prior to joining Neuberger Berman in 2023, she was the Chief Investment Officer for five years for SVB Private and Boston Private Wealth, which SVB acquired in July 2021. In this capacity, she oversaw all investment management functions, including portfolio construction, asset allocation, third-party manager selection, equity and fixed income portfolio management, performance and trading. Previously, she had senior roles at Banyan Partners and Silver Bridge Advisors focused on manager selection and portfolio construction.
Shannon received her BA in Economics and History from Brandeis University, and has been awarded both the Chartered Financial Analyst and Certified Investment Management Analyst® designations.
Brad Tank
Brad Tank, Managing Director, joined the firm in 2002. Brad is Co-Chief Investment Officer and the Global Head of Fixed Income. He is a member of Neuberger Berman’s Partnership, Investment Risk, Asset Allocation Committees and Fixed Income’s Investment Strategy Committee. From inception in 2008 through 2014, Brad was also Chief Investment Officer of Neuberger Berman’s Multi-Asset Class Investment business. From 1990 to 2002, Brad was director of fixed income for Strong Capital Management in Wisconsin. He was also a member of the Office of the CEO and headed institutional and intermediary distribution. In 1997, Brad was named “Runner Up” for Morningstar Mutual Fund Manager of the Year. From 1982 to 1990, he was a vice president at Salomon Brothers in the government, mortgage and financial institutions areas. Brad earned a BBA and an MBA from the University of Wisconsin.
As previously announced, Brad Tank will transition from Co-CIO of Fixed Income to a Senior Advisor role at the end of 2024, at which time Ashok Bhatia will assume the role of sole CIO of Fixed Income.
Anthony D. Tutrone
Anthony Tutrone is the Global Head of NB Alternatives and a Managing Director of Neuberger Berman. He is a member of all Neuberger Berman Private Equity’s Investment Committees. Anthony is also a member of Neuberger Berman's Partnership, Operating, and Asset Allocation Committees. Prior to Neuberger Berman, from 1994 to 2001, Anthony was a Managing Director and founding member of The Cypress Group, a private equity firm focused on middle market buyouts that managed approximately $3.5 billion of commitments. Anthony began his career at Lehman Brothers in 1986, starting in Investment Banking and in 1987 becoming one of the original members of the firm’s Merchant Banking Group. This group managed a $1.2 billion private equity fund focused on middle market buyouts. He has been a member of the board of directors of several public and private companies and has sat on the advisory boards of several private equity funds. Anthony earned an MBA from Harvard Business School and a BA in Economics from Columbia University.