The first quarter of 2025 has been far from quiet, marked by devastating wildfires in the U.S., a seismic earthquake in Southeast Asia, and the inauguration of one of the most unorthodox U.S. presidents in history, Donald Trump. His rapid signing of numerous Executive Orders has set a dramatic tone for the geopolitical landscape, keeping the asset managers keenly focused.
The United States, under President Trump, has implemented extensive tariffs aimed at protecting domestic industries and addressing trade imbalances. These measures have triggered retaliatory actions from the European Union, China, and Canada, leading to a surge in protectionist policies reminiscent of the 1930s. This escalation raises concerns about slower economic growth and increased inflation worldwide.
Some analysts warn of a “geopolitical recession,” characterised by increased polarisation and fragmentation. Despite these challenges, global economic growth is projected to exceed 3%, provided no new crises emerge. The year ahead is expected to be tumultuous, with ongoing conflicts, geopolitical instability, and technological advancements shaping international relations.
Closer to home, Chancellor Rachel Reeves delivered her Spring Statement, revealing that the UK’s growth forecast has been halved for the year amid oversupply concerns and inflationary pressures. Despite this, business and retailer confidence remains relatively optimistic, bolstered by stronger-than-expected retail sales in January and February.
Reflecting on 2024 in the U.S., the S&P 500 delivered its second consecutive year of over 20% growth, with an impressive 2024 return exceeding 26%. This level of performance has not been seen since the late 1990s. Remarkably, nearly 75% of these gains came from the top seven tech-focused stocks, now famously dubbed the “Magnificent 7.” The debate continues over whether these stocks are in bubble territory. However, their dominance reflects how integral big tech has become to daily life, particularly with Artificial Intelligence (AI) making significant strides in commerce, education, and healthcare.
The UK’s FTSE 100 defied gloomy economic forecasts with a 2024 return of just under 10%. The new government has prioritized “fixing the foundations” and shown a willingness to make bold decisions. While long-term growth prospects for the UK remain modest, only time will tell if Labour’s plans to curb borrowing and stabilize public finances will succeed.
As 2025 unfolds, investors should maintain a diversified approach while remaining vigilant to macroeconomic and geopolitical developments. Staying informed and adaptable will be key to navigating the evolving market landscape, and our Flagship Investment Portfolios are designed to do just that.
Investing in the stock market has consistently rewarded those who stay the course. Historical data from the MSCI World Index (1999-2024) shows an average annual return of just over 7%. However, achieving these returns is rarely a smooth ride. Market volatility is part of the journey, but disciplined investing often pays off in the long run.
At Aquila, the Investment Committee meets regularly to evaluate whether adjustments to portfolios and strategies are needed. As non-discretionary managers, our goal is to provide you with a positive investment experience through effective fund selection. We recommend agile, flexible funds that can adapt to evolving market conditions. Our strategy involves selecting “best-of-breed” risk-managed funds with diverse styles and holdings. This active approach allows us to navigate the unpredictable economic and political landscape, aiming to deliver long-term benefits to our investors.
Our professionals focus on selling overvalued assets and buying undervalued ones to generate long-term returns. We are proud to report that the Aquila Flagship Portfolios have consistently delivered above-average returns. Please refer to the factsheet provided with your latest valuation for detailed insights into your selected portfolio.
If you have any questions or would like to discuss your investment strategy, we are here to help.
