Three themes for summer 2025

THIS VIDEO IS MARKETING MATERIAL

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The first half of 2025 was a rollercoaster – with sharp swings in markets, against a backdrop of elevated geopolitical and policy uncertainty. Despite several periods of volatility, we’ve seen investor sentiment turn more positive since April, when US tariff announcements initially spooked markets – but we’ve also seen this positivity channelled into new investment trends. Three stand out – and they’re our key investment themes for this summer.

Firstly, we’ve seen investors increasingly look to diversify their stock holdings, seeking to reduce concentration in US stocks and build more exposure to regions like Europe and Emerging Markets. Within EM, we’ve seen particularly positive sentiment towards Indian equities. Why India? India’s position as a non-aligned country has helped it navigate trade and geopolitical uncertainty this year, and the market’s low correlation to developed market stocks boosts its potential as a portfolio diversifier, helping to build resilience. While Indian stock prices look a little expensive compared to their peers elsewhere, we still favour entry at this level.

Secondly, elevated uncertainty is leading more investors to seek stable sources of income. We see an opportunity today in UK government bonds, or gilts: yields on gilts remain at elevated levels – and with the Bank of England expected to cut interest rates further this year, we could see gilt prices rise, offering potential gains for investors who buy at lower prices today. Gilts are issued by the UK government, which means the risk of default is relatively low – so gilts can offer a stable income stream even if markets stay volatile.

This brings us to our third theme, which focuses on gold as a potential hedge against geopolitical risk – a role it has played over the past 18 months. While prices may not be able to keep rising at the same rapid pace, we think any downside should be cushioned by persistent demand for gold from central banks. We see official demand as a structural trend – complemented by strong appetite from professional and retail investors alike. In fact, 2025-to-date would already qualify as the second highest inflow year on record for gold exchange-traded products.

For more on these three themes, see our latest report, Turning views into action.

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