The Amundi Investment Institute, part of European asset manager Amundi, has just released its latest investment outlook for 2025.

Amundi Investment Institute believes that economic growth in the US and Europe is reasonable, and inflation is slowing, painting a supportive backdrop for risky assets. Consequently, the firm has strengthened its positive stance on US equities and turned constructive on Europe in 2025, while also maintaining a small positive view on the UK and Japan.

“The US should be supported by economic strength and new government’s policies while being less vulnerable to weak global demand. Europe is appealing as a value play, and challenges from a worsening trade environment are heavily discounted,” Amundi said in a note.

“In equities, diversification is the name of the game, as concentration risk remains the top concern,” Amundi continued. In the US, it remains cautious on the mega caps and explores opportunities down in the capitalisation spectrum in companies that could benefit from a resumption in industrial demand and economic growth but where the valuations do not yet reflect this. It thinks the rally broadening towards more US value, cyclical stocks will benefit from an uptick in economic activity. Amundi favours value, quality, and defensive stocks beyond the traditional names. Sector-wise, it prefers materials and US large banks that are structural winners and could benefit from favourable regulatory changes and lower taxes.

Other wealth managers, such as Northern Trust Asset Management, UBS Global Wealth Management, Pictet Asset Management and Goldman Sachs Asset Management also favor US equities in 2025. See more commentary here.

In Europe, Amundi prefers staples and healthcare stocks with pricing power. It also favours banks that are less sensitive to rate changes and have strong capital buffers versus those more sensitive to rate reductions. While Amundi is cautious on tech and industrials, it sees opportunities in industrial names linked with the long-term electrification theme.

“Any dollar strength and rise in geopolitical risks will likely create volatility for emerging markets, but their growth potential is strong and central banks are prudent. We aim to explore resilient bottom-up stories that are driven by domestic consumption themes in debt and equities,” Amundi continued.

It is constructive on emerging market equities, but does see divergences. For instance, in China, the recent announcements clarified that the country has fiscal space, but whether it is willing to use this is still a question. Some segments are attractively priced, but Amundi stays neutral. Outside China, Amundi is positive on Indonesia, Mexico, and Brazil, whereas it exercises caution on Taiwan and Saudi Arabia.

Amundi is also searching for opportunities in emerging market (EM) bonds, in particular in the Czech Republic, South Africa, and Indonesia. To counterbalance this overall pro-risk allocation, it maintains a positive duration bias as a hedge against potential deterioration in the growth outlook. It has also added some equity hedges and keeps gold as a diversifier.

Amundi believes that fixed income as an asset class will be increasingly affected by uncertainty around fiscal and monetary policies. As a result, it maintains a tactical approach to duration in the US and Europe, where it looks for opportunities on the expected steepening of the yield curves. In the UK, Amundi is positive but is monitoring the recent strong inflation and wage growth data, while in Japan bonds, it remains cautious. In the credit market, the firm continues to favour investment grade, in particular in Europe, where valuations look more attractive. In contrast, it is cautious on US high yield.

US tariff risk
Amundi highlighted how higher US tariffs are likely to hit various countries in different ways, if implemented. The eurozone has a high reliance on exports, which accounts for some 50 per cent of GDP on average, but it varies across countries. China should be hit hard; to offset the likely impact of US tariffs, the recently-held economic conference set a pro-growth and pro-stimulus tone for 2025, with likely additional fiscal spending, mostly to help domestic consumption. Details should be unveiled during the National People’s Congress in March. Amundi is close to neutral on Chinese equities but, given the fluid situation, this could change. On credit, it favours investment grade over high yield.

Amundi is a European asset manager, managing more than €2 trillion ($2.2 trillion) of assets. The Amundi Investment Institute, launched in 2022, brings together Amundi's research, market strategy, investment themes and asset allocation advisory activities to help meet the needs of investors on economic, financial, geopolitical and environmental topics.