Investors should stay the course in 2025: Expert

Despite some critical short-term influences markets are currently withstanding, Morningstar portfolio manager Bianca Rose is advising investors to tread into the new year carefully without committing their investments solely to those events.

Rose told Financial Standard investors should avoid side-tracking from brief distractions and focus on their goals in 2025.

"We do not try to predict what is going to happen in the short-term, including election results in some countries," Rose explained.

"We do observe all the political tensions and macroeconomic developments, but only to get a gauge for optimism or pessimism in the markets.

"Investors should start with their goals, giving them an idea from the supply driven perspective and what investment markets are offering."

She also explained investors that have a lower targeted return can take advantage through the booming bond market.

"Investors could probably achieve these lower return goals by focusing more on bonds, which is probably not where investors had their eyes on a few years ago when the asset class was not delivering the results desired," Rose said.

"Investors could have a diversified portfolio with bonds against their growth assets, and for those who are looking for higher returns [in 2025], they will probably need to tread their strategies carefully."

Additionally, Rose noted that Morningstar tends to favour the Chinese and the South Korean markets for specific asset classes against the "expensive" US equities, but ultimately it sees more value in the latter.

"We have noted in our paper that we also like China and South Korea... [as] US equities are on the expensive side," she added.

"There are enough opportunities [outside the US] including commodities like electric vehicles spreading rapidly across emerging markets.

"[However] within US equities, small caps is probably the one area that is [offering] a little better value."