WealthBT: Strategic investment insights to navigate 2025

If you are invested in the S&P 500 or even a global equities fund, you must be sitting on some very good profits. Returns from the MSCI World Index were also very good, only just slightly lower. The World Index too did well, largely driven by US stocks, which make up more than 70 per cent of the index. 

But what can investors expect from 2025 and how should they be positioned? Genevieve Cua, wealth editor of The Business Times speaks with Hou Wey Fook, chief investment officer of DBS Bank on the latest episode of WealthBT to garner his thoughts. 

Significant developments of 2024

First, the US presidential election - which saw Trump winning again - has potential implications for 2025 investment strategies. Secondly, the Federal Reserve pivoted from years of rate hikes to rate cuts. Lastly, the ongoing breakthroughs and the rise of artificial intelligence are impacting not just the technology sector, but all sectors of the global economy.

With the enthusiasm surrounding AI lifting many US stocks, investors might wonder if it’s time to trim their US positions. Wey Fook shares insights on this question pointing out that companies such as NVIDIA, Amazon, Microsoft, and various software services and cybersecurity firms are leading the innovation charge.

Asian market opportunities

In contrast, Asian stocks also have their role, particularly in the manufacturing of complex chips by companies in Taiwan and Korea. Moreover, Asia is a fertile ground for dividend-yielding stocks like Singapore banks and Reits (Real Estate Investment Trusts), which offer consistent dividend payouts.

Genevieve brought up the topic of risk premium and its current status given recent market performances. Wey Fook explained that risk premium is the additional return over cash deposits captured from bonds or stocks. While the risk premium has decreased, not all sectors are affected equally. 

Exploring the barbell approach

Shifting to investment strategies, specifically the barbell approach which Wey Fook has long advocated. This approach involves constructing a portfolio with oversized positions in income-generating assets. He further expands on this in the podcast including how the strategy can withstand risk.

He also shared valuable lessons from his 30 years of investment experience cautioning against frequent trading, which can lead to anchoring bias—where investors lock in profits too soon and miss out on greater long-term gains. 

Portfolio rebalancing

In conclusion, strategists are emphasising the importance of maintaining US exposure while managing expectations for future returns. Individual portfolios should reflect unique objectives and proper asset allocation. Rebalancing portfolios by trimming equities can keep investments aligned with strategic goals. As the year unfolds, keeping a balance of risky growth assets and secure investments remains crucial. 

Listen to the full podcast for insightful advice and informed financial fluency from both host Genevieve Cua and Hou Wey Fook, chief investment officer of DBS Bank.

Stay tuned for more insightful episodes from BT Correspondents. For any thoughts or questions, reach out to the podcast team at btpodcasts@sph.com.sg.

Written and hosted by: Genevieve Cua (gen@sph.com.sg)

With Hou Wey Fook, chief investment officer, DBS Bank

Edited by: Emily Liu & Claressa Monteiro

Produced by: Genevieve Cua & Emily Liu

Engineered by: Chai Pei Chieh

A podcast by BT Podcasts, The Business Times, SPH Media

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