As investors shape their portfolios for 2025, asset managers are advocating a diversified approach that makes selective bets on undervalued sectors. CNBC Pro spoke to Olly Clarke, deputy head of research at WH Ireland, and Mark Preskett, senior portfolio manager at Morningstar Wealth, to discuss how an investor with around $500,000 could invest in their portfolio. I asked how it would be distributed. Clark expects the growth in artificial intelligence to deliver significant gains again this year. So far, AI trends have lifted the S&P 500 index by nearly 25% in 2024, making AI chip stock Nvidia the world's largest company by market capitalization. “U.S. revenue forecasts remain high and will likely pose a significant hurdle to achieving similar levels of revenue in 2025,” Clark told CNBC Pro. “We expect revenue to be the only driver of revenue next year, but with the rapid growth driven by AI, we expect to see a significant return this year as well,” Clark said. For UK-based investors managing portfolios of between $500,000 and $750,000 over time, we recommend an equity-heavy allocation with approximately 85% invested in equities and 15% exposure to gold and UK government bonds. did. . Investors whose portfolios are already geared towards a traditional 60/40 stock/bond mix can expect some limited relief in the future, Clark said. Bond prices, previously seen as a hedge, fell along with stocks in 2022 as the Federal Reserve raised interest rates. “The 60/40 portfolio still provides some protection against growth shocks, but I'm more skeptical about inflation shocks,” Clark said, adding that the 60/40 portfolio still provides some protection against growth shocks under President-elect Donald Trump's second administration. He emphasized the possibility of inflation policy. “If inflation flares up again, which is highly likely given President Trump's inflation policies and the need to build up huge amounts of debt, bonds will be sold off as yields rise, and stock prices will decline,” Clark said. It is likely that it will be difficult,” he added. Mark Preskett of Morningstar Wealth agreed that the outlook for a traditional 60/40 stock/bond portfolio should improve if inflation concerns remain subdued. “We're in a much better position with the 60/40 portfolio,” he said. However, Preskett cautioned, “Investors should carefully consider bond exposure given the potential for policy changes under President Trump's second term,'' adding, “Tariffs could be an inflationary threat to the U.S. economy.'' “This could have an impact on bonds,” he added. One bright spot Preskett highlighted is the U.S. small-cap sector, which is trading at 15- to 20-year lows on a price-to-earnings basis compared to large-cap stocks. “Make America Great Again should benefit America's small and medium-sized businesses, which are more focused on the U.S. domestic economy,” Preskett said. He cited the SPDR Portfolio S&P 600 Small Cap ETF as one way investors can gain exposure. Mr. Preskett also highlighted opportunities outside the United States, such as South Korea offering a compelling value proposition for long-term investors looking to weather short-term volatility. Preskett said Korean technology companies, particularly those involved in high-bandwidth memory chips essential for AI applications, such as SK Hynix and Samsung, offer attractive entry points at current valuations. A Morningstar Wealth portfolio manager said investors could gain exposure to such companies through the Franklin FTSE Korea ETF. Meanwhile, WH Ireland's Clark said there was value in the commodity. “While it has sold off recently in the face of growth concerns, pure demand for commodities like copper for the energy transition, AI and defense is hard to match.” Due to the energy transition to electricity Despite increased demand, copper prices have fallen 20% since May 2024. Clark's fund owns shares in companies that mine copper. Retail investors can access trends through ETFs such as the iShares Copper and Metals Mining ETF. @HG.1 YTD line
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