
April 10, 2025
Heightened market uncertainty in the United States puts the spotlight on opportunities in global markets
Source: Manulife Investment Management, April 2025. These views are updated on a quarterly basis. This commentary is provided for informational purposes only and is not an endorsement of any security, mutual fund, sector, or index. No forecasts are guaranteed.
Heading into 2025, the consensus on European macro and assets was decidedly bearish. While we’ve been relatively less pessimistic, we haven’t been bullish about the region either. Tariffs remain a clear potential headwind, but over the past few months, there have been a series of constructive macro developments that suggest a more favorable policy mix ahead, which should support growth. This led us to upgrade our view from underweight to neutral in January.
These include the EU Commission’s ReArm Europe Plan, which is expected to increase defense spending across Europe at a time in which industrial and manufacturing activity has been weak. Separately, in Germany, a new leadership coalition is determined to push growth and economic reform, highlighted by a €500 billion special purpose vehicle, potential debt break reforms, and a more pro-business approach. We’d expect all of these to put upward pressure on our growth outlook.
After another rate cut from the ECB in March, from our perspective, monetary policy in the eurozone is more accommodative than peers such as the United States or the United Kingdom where neutral is still a ways away. The ECB’s 150 basis points of easing over the past nine months has and should continue to support credit conditions, which could be a tailwind to growth. Looking ahead, our base case is for two more cuts from the ECB this year, to a neutral rate of 2%.
A shifting macro narrative in Europe has been a major tailwind for European assets in 2025, including the euro. European equities have strongly outpaced the S&P 500 Index, leading to a material shift in flows. While we don’t form our macro views on flow dynamics, the move has been material; we think this momentum is encouraging global investors to consider ex-U.S. assets. While we see positive trends, we must wait and see the longer-term impact of policy changes on earnings.
Asset class returns comprise the Multi-Asset Solutions Team’s expectations of how different asset classes may perform over a 5-year and long-term (20-year-plus) time horizon.
Source: Multi-Asset Solutions Team, Manulife Investment Management, as of January 31, 2025. Not all asset classes with forecasts are represented in every portfolio managed by the Multi-Asset Solutions Team. Data shown in the tables reflects the most recent data available. Asset class forecasts comprise inputs driven by proprietary Manulife Investment Management research and are not meant as predictions for any particular index, mutual fund, or investment vehicle. To initiate the investment process, the investment team formulates 5-year and 20-year plus risk/return expectations, developed through a variety of quantitative modeling techniques and complemented with qualitative and fundamental insight. Assumptions are then adjusted for a number of factors. This chart contains forecasts reflecting potential future events and is only as current as of the date indicated. There is no assurance that such events will occur, and the actual asset class return may be significantly different than that shown here. This material should not be viewed as a recommendation or a solicitation of an offer to buy or sell any investment products or to adopt any investment strategy. It is not possible to invest directly into an index. Past performance does not guarantee future results.
Nathan W. Thooft, CFA
CIO, Multi-Asset Solutions Team, Global Equities
Robert E. Sykes, CFA
Senior Portfolio Manager, Head of Asset Allocation, U.S., Multi-Asset Solutions Team
James Robertson, CIM
Senior Portfolio Manager, Head of Multi-Asset Solutions, Canada, Head of Tactical Asset Allocation, Multi-Asset Solutions Team
Luke Browne
Senior Portfolio Manager, Global Head, Multi-Asset Solutions Team, Head of Multi-Asset Solutions, Asia
Geoffrey Kelley, CFA
Senior Portfolio Manager, Global Head, Systematic Equity Solutions, Multi-Asset Solutions Team
Benjamin W. Forssell, CFA
Client Portfolio Manager, Global Multi-Asset Team, Multi-Asset Solutions Team
Eric Menzer, CFA, CAIA, AIF
Senior Portfolio Manager and Global Head of OCIO and Fiduciary Solutions, Multi-Asset Solutions Team
April 10, 2025
April 10, 2025
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