Single-family offices 2025 outlook 

Family offices should consider thematic investments to potentially capture long-term investment returns and may capitalize on structural trends and emerging risks. 

Thematic investments are centered around long-term growth opportunities, enabling family offices to leverage the compounding effect of sustained growth over many years. This strategy can be especially advantageous for families aiming to preserve wealth across generations. We may recommend establishing a thematic framework for identifying investment themes, as one of the initial challenges family offices may encounter when building a thematic portfolio is theme identification.

We believe that a systematic approach across the total portfolio can be helpful, encompassing several key steps: analyzing the long-term structural changes that underpin each theme; thoroughly assessing the timeline and cyclicality of each theme; evaluating potential profitability; examining liquidity and capacity; and finally, assessing the likelihood of multiple themes converging. We advise adopting an active multi-manager, multi-theme strategy to successfully implement thematic investments.

The outlook for equities is mixed in 2025, however, we still find notable opportunities in Japanese equities and real estate investment trusts (REITs). In the credit space, we prefer Asia high-yield and frontier market debt.

Our 2025 economic and market outlook suggests that after aggressive interest rate hikes in 2022 and 2023, central banks are now cutting rates to transition from a restrictive to a more neutral monetary policy, aiming to balance growth and inflation. While growth in developed economies is expected to soften in the near term due to the lagged effects of previous policies, recession risks remain low due to strong corporate and household balance sheets. Looking ahead to the second half of 2025, the loosening of monetary policy is anticipated to boost growth, although uncertainties in China and tariff increases in the US could impact inflation and economic stability.

We believe that in 2025, equities will experience a mixed backdrop, with a supportive economic environment and potential upside from AI bolstering earnings. While this may be partially offset by stretched valuations, we still expect equities to provide higher anticipated returns compared to cash, which may justify an overweight position. Additionally, we see opportunities in Japanese equities and REITs. Japanese equities may benefit from a structural pickup in nominal growth, including accelerating capital expenditure and REITs fundamentals are solid, and there is a misplaced narrative on the composition of the indices that leaves the asset class largely unloved.

In credit markets, we favor Asian high yield (AHY) due to its attractive valuations and supportive macroeconomic conditions. Frontier market debt (FMD) also may present solid fundamentals, offering appealing yields within a well-diversified universe. While we expect a high global yield to help deliver reasonable returns, we are underweight in this area because of very tight spreads, which serve as a partial offset to our positions in AHY and FMD. In the government bond markets, particularly in the US, expectations for aggressive interest rate cuts have cooled, and we believe central banks will adopt a gradual approach. Consequently, we are modestly underweight duration to help mitigate the risk that a significant rise in yields could negatively impact other portfolio positions, especially considering potential upward pressure on yields from some of President Trump's policies.