Matthew Strachan

A strong year for most asset classes proves yet again that markets are adept at climbing a wall of worry. 2025 may prove more tricky. China has yet to engage with meaningful growth, Europe is in danger of dipping below stall speed, and the UK Budget has failed to breathe life into the animal spirits of business.

The US, in contrast, enters the year in bullish mood. However, you have to 'pay to play' in America. Market concentration and valuations will leave our US exposure at similar levels, but with a higher weighting in smaller cap. European exposure will remain low with a messy political and economic outlook. With the consumer in a generally healthy position and valuations low, UK small cap might be increased.

We will likely remain neutral on Asia/Emerging, due to sensitivity to trade tariffs and a strong dollar. Full tariff enactment is one of the main worries for 2025, the other is uncontrolled fiscal deficits, and we remain wary of longer-duration debt.