Infinity Asset Management has offered its top five investment themes for 2025, with a focus on growth.
The company’s portfolio leans towards equities and increased exposure to real estate. Credit markets within bonds are favoured over government securities, reflecting anticipated shifts in interest rate policies. Growth-oriented alternative investments remain a priority, while defensive strategies are scaled back. Emerging markets are underweight due to weak Chinese growth, deflation risks, and a strong US dollar; however, potential recovery in China will be monitored closely in the coming year.
Key factors shaping the investment approach include:
- Falling interest rates, which should bolster growth investments, though unexpectedly high rates could pressure valuations.
- US market dynamics, with potential policy changes favouring smaller companies.
- A cautious outlook on Chinese recovery, balancing opportunities and significant risks.
- Anticipation of a Federal Reserve leadership change in 2026, potentially impacting sentiment.
Infinity’s top five investment themes for 2025
1. Cautious stance on banks
- High valuations and declining earnings signal caution.
- Historical underperformance post-valuation peaks leads to an underweight position.
2. Positive outlook for healthcare
- Companies such as CSL, ResMed, and Sonic Healthcare are poised to benefit from rising demand for pathology, blood plasma, and medical devices.
- Strong return potential and attractive valuations highlight sector appeal.
3. Focus on logistics
- Complex global trade dynamics favour companies like WiseTech, Brambles (ASX:BXB), and Qube Logistics, well-positioned for growth.
4. Improved transaction environment for private assets
- Infrastructure deals, such as Blackstone’s AirTrunk purchase and KKR’s stake in Queensland Airports, signal renewed confidence in the sector post-pandemic.
5. Impact of declining interest rates
- US monetary easing is expected to benefit private equity, fostering more transactions, higher profits, and favourable valuations.
Infinity has a positive but cautious stance for 2025. While falling interest rates and strong equity dynamics present opportunities, risks like geopolitical tensions and uneven global growth necessitate a flexible, growth-focused approach to navigate challenges and capitalise on opportunities.