Key Takeaways
+ Unlike the prior two years, the outlook for 2025 doesn’t include the potential for a recession.
+ The Federal Reserve recalibrated monetary policy to move toward a neutral stance, but the policy makers show no urgency to get there.
+ U.S. interest rates have returned to historically more normal levels and seem poised to remain there in the year ahead despite the potential for more Fed rate cuts.
+ We believe the bond portfolio decision-making process could benefit from taking an active-passive barbell approach from a solution standpoint.
+ A significant breakdown in correlations between U.S. large-cap and small-cap equity benchmarks suggests a potential shift in market leadership, with small- and mid-caps poised for a resurgence in 2025.
Related Resources
IMPORTANT INFORMATION
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Foreign investing involves currency, political and economic risk. Investments in emerging markets, real estate, currency, fixed income and alternative investments include additional risks. Fixed income investments are subject to interest rate risk; their value will normally decline as interest rates rise. In addition, when interest rates fall income may decline. Fixed income investments are also subject to credit risk, the risk that the issuer of a bond will fail to pay interest and principal in a timely manner, or that negative perceptions of the issuers ability to make such payments will cause the price of that bond to decline. Securities with floating rates can be less sensitive to interest rate changes than securities with fixed interest rates but may decline in value. Investing in mortgage- and asset-backed securities involves interest rate, credit, valuation, extension and liquidity risks and the risk that payments on the underlying assets are delayed, prepaid, subordinated, or defaulted on.
This material contains the opinions of the authors, which are subject to change, and should not be considered or interpreted as a recommendation to participate in any particular trading strategy, or deemed to be an offer or sale of any investment product, and it should not be relied on as such. There is no guarantee that any strategies discussed will work under all market conditions. This material represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results. This material should not be relied upon as research or investment advice regarding any security in particular. The user of this information assumes the entire risk of any use made of the information provided herein.
Kevin Flanagan, Chris Gannatti, Rick Harper, Jeremy Schwartz, and Jeff Weniger are registered representatives of Foreside Fund Services, LLC.
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