Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever
Key points:
- Diversification is critical: After years driven by a handful of US tech giants, broad diversification across sectors, regions, and asset classes is essential for navigating increased volatility and uncertainty.
- Equities remain attractive—but brace for volatility: Despite recession risks and geopolitical tensions, equities still offer upside. However, the easy returns of recent years are gone. Investors must be selective and ready for swings.
- Look beyond the US: Compelling investment opportunities are emerging outside US markets and tech, particularly in Europe and China, as the global economic landscape shifts.
Setting the scene: US exceptionalism faces reality
Investors entered 2025 confidently betting on continued US…
