Investing under Trump: How should you allocate your portfolio in 2025?

But, unlike today, back then, non-US countries were showing clear signs of strong economic rebound. So, while we expect equities in general to perform well in the medium term, coming into the new year, we expect US equities to lead the pack and to be a more attractive place to source equity risk premium.

Another point of departure is, we also do expect lower-volatility, higher-stability stocks to shine as we are much later in the business cycle today than we were back in 2016.

Fixed income

Interest rate volatility was very high during Trump’s first year as president, and we expect the same to unfold in 2025. Moreover and more importantly, we also expect there to be greater upward pressure to interest rates today than previously because his pro-growth policies represent a much greater and significant threat to inflation this time around.

It is much easier to ignite inflation when the memory of rising prices is still fresh in consumer’s minds, just like it is today. We believe the risk to higher rates is more severe here in the US than outside the US, given lacklustre growth we expect in other regions.

Currencies

Loading

Lastly, on currencies, unlike 2017, where the US dollar rally lost steam, we expect dollar strength to continue throughout most of 2025 as economic growth outside the US is not the bright spot that it was back in 2017.

Furthermore, the US administration’s pro-growth policies will likely delay interest rate cuts and accommodation by the Federal Reserve, lending further support to a strong US dollar.

So, while history is repeating with Trump back in the White House, you likely will not see an exact repeat of capital market performance.

Understanding the points of similarity and understanding the points of departure should prove to be quite valuable as investors navigate where best to invest in 2025.

Ashwin Alankar is the Head of Global Asset Allocation and a Portfolio Manager at Janus Henderson Investors.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

Expert tips on how to save, invest and make the most of your money delivered to your inbox every Sunday. Sign up for our Real Money newsletter.