Geopolitical risks, inflation, and recession highlighted as top investment concerns in 2025
From Morningstar: 2025-05-28 06:11:00
Global trade wars, major geopolitical conflict, and higher inflation are the top investment risks in 2025, according to the UBS Global Family Office Report 2025. Family offices, overseeing wealthy families’ financial affairs, expressed concerns about trade wars and geopolitical conflicts, with 70% and 52% highlighting these risks, respectively. Additionally, worries about global recession, debt crisis, and government borrowing were also cited.
Family offices plan to maintain their portfolio risk levels in 2025, with 59% intending to take the same amount of risk as in 2024. However, concerns about the unpredictability of traditional safe haven assets persist amidst global economic uncertainty. To combat this, 40% of family offices are considering relying more on manager selection and active management, with 31% looking to hedge funds for risk management.
A shift towards developed market equities is evident among family offices, with allocations rising to 26% in 2024 and expected to increase further to 29% in 2025. Meanwhile, allocations to emerging markets remain low, with only 4% allocated to developing market equities in 2024. Geopolitical concerns, political uncertainty, and sovereign default risks are cited as barriers to investing in emerging markets.
Active management remains popular among family offices, with over a third (36%) of equity investments managed actively. Different regions show varying preferences for active versus passive management, with the US favoring active management at 53%. Family offices are diversifying across investment styles, with growth, value, and quality being popular choices.
Wealth succession planning is a key focus for family offices, with 53% globally having plans in place. Challenges include tax-efficient wealth transfer, preparing the next generation for wealth responsibility, and aligning succession with family aims. Consultation with the next generation about succession planning is done by only 26% of family offices. 1. The stock market saw a significant increase today, with the S&P 500 reaching a new all-time high of 4,500 points. This surge was driven by strong earnings reports from major tech companies like Apple and Amazon, as well as positive economic data indicating a growing economy.
2. In international news, tensions between Russia and Ukraine continue to escalate, with reports of increased military activity and troop movements along the border. The United States and its allies have expressed concern over the situation, calling for a peaceful resolution to the conflict.
3. The latest data on COVID-19 cases shows a slight decrease in infection rates, with new cases dropping by 10% compared to last week. This positive trend has been attributed to the ongoing vaccination efforts and public health measures in place to curb the spread of the virus.
4. In sports news, tennis star Novak Djokovic secured his spot in the finals of the US Open after defeating his opponent in a thrilling match. Djokovic is now on track to potentially make history by winning all four Grand Slam titles in a single year.
5. The housing market continues to boom, with home prices reaching record highs in many parts of the country. Low mortgage rates and high demand have fueled this trend, leading to bidding wars and limited inventory for prospective buyers. Experts predict that this trend will continue into the foreseeable future.
Read more at Morningstar: Tariffs, War and Recession Pose Biggest Investment…