Ms. Marchioni, where should investors focus their attention in 2025? 

That’s a very good question. We are in a phase of extreme volatility, coupled with a significant shift in market dynamics. This is also impacting how investors allocate their capital.

Last year, we often heard about «U.S. exceptionalism»” – pointing to the fact that basically everything was perfectly aligned, as if the stars had lined up: the strength of the underlying economy, the stabilization of the labor market, and major structural factors such as technology supporting the market.

As a result the S&P500 ended the year positing a performance of nearly 25%, and investors committed heavily to the U.S. market, particularly around the US elections and in the months that followed. To put things into perspective, we saw $ 823 bn of inflows in US equity Exchange Traded Products (ETP) alone, of 65% of total inflows into Equity products – a record. 

That was the reality in 2024. Now, in 2025… 

… on the surface, the picture has changed significantly. As the second week of March came to an end, in local currency, there is nearly a 15-percentage-point divergence in performance between European and U.S. equities. This year, Europe has outperformed, while the S&P 500 has declined by nearly 4 percent.

«Recent policy announcements in Germany, particularly fiscal measures, could unlock growth potential.»

As a result, we are seeing a slowdown in capital inflows into U.S. equities, and investors are increasingly turning to European assets. In fact, international investors from the U.S. and Asia are also showing renewed interest in Europe —case in point: global ETP flows. Just three months into the year, with $27.1 billion in inflows, we are on track for the third-largest inflow year on record.

Where do you see opportunities for investors?

It depends on the time horizon. In the short term—over the next three to six months—volatility is likely to persist. The U.S. administration has been in office for almost two months now, but many policy changes are still under discussion or in the process of implementation. This adds to uncertainty and affects consumer behavior in the U.S.

Yet, in the longer term, most of the underlying pillars of the ‘U.S. exceptionalism’ thesis remain—the strength of earnings, the overall shape of the economy, and so on. Therefore, we remain overweight on the U.S.

Will we see an upward movement in Europe?

Looking at Europe, we have already witnessed the first phase of a recovery rally. From Blackrock’s perspective, we maintain a neutral stance but with a slight upward bias. Recent policy announcements in Germany, particularly fiscal measures, could unlock growth potential.

However, the path to deployment remains unclear. And Europe still faces structural challenges, ranging from demographic shifts to persistently low growth. So, a second leg of the rally can happen – but is not a slam dunk. 

So, you don’t have a clear picture of what’s coming, but there could be a shift from the U.S. to Europe as short-term opportunities emerge?

Yes, that’s certainly a possibility – the momentum is different from 2024, and markets and client flows are reflecting that. Yet, the prospects of the US in the medium term remain strong. 

«The classic 60/40 portfolio is not performing as well as it used to.»

What does this mean for investors?

Investors need to take a long-term perspective while keeping volatility in mind. One key takeaway is that we must move away from traditional portfolio structures. The classic 60/40 portfolio is not performing as well as it used to. Asset allocation is becoming increasingly important.

Can you elaborate on that?

Our analysis shows that asset allocation decisions today have a much larger impact than in the past. During the «Great Moderation» the 4 decades long period ending in 2020, a 20-percent shift between equities and bonds could result in a return change of around 0.25 percent per year. Today, that same decision can lead to a difference of up to 2 percent. This underscores how much more complex investing has become.

How are investors adapting?

First of all: asset allocation needs to become more dynamic – to reflect the nature of the environment we are in. Gone are the days of set and forget allocations. Choice of products also need to become more precise, going beyond regional equity blocks which do not allow to capture market size or sector opportunities.

«We expect the private markets’ volume to grow to around $30 trillion by 2030.»

Then, we need more levers of performance and diversification – and an answer to that cane be the increased use of alternative asset classes, particularly private markets. Around 87 percent of global companies with revenues exceeding $100 million are privately held. This highlights the vast potential of private markets. We expect the private markets’ volume to grow to around $30 trillion by 2030.

How is wealth management evolving in this new environment?

The rising complexity of capital markets is driving structural changes. Many banks are shifting toward discretionary mandates and centralized investment advisory. Over the past five years, the share of structured investment solutions has grown from 36 percent to 47 percent and is projected to reach 55 percent by 2028 – setting in motion over $2Tr across the region.

Why this shift? 

It no longer makes sense for every advisor to develop a separate investment strategy for each individual client. Instead, centralizing investment processes is more efficient. A CIO office can develop well-researched investment strategies that are then tailored to different client profiles. At the same time, technological advancements are enabling the scaling of individualized solutions—particularly for the affluent segment.

«Switzerland is an incredibly exciting market.»

What role does Switzerland play in this transformation?

Switzerland is an incredibly exciting market, both in terms of the quality of financial services and the existing infrastructure. The challenge is to extend some of the best practices already in place for high-net-worth clients to the affluent segment – not only in Switzerland but also exporting it across Europe as many Swiss champions have international operations. Currently, this segment of clients is primarily positioned in cash and not investing, meaning a significant amount of capital remains untapped.

What needs to change to unlock this potential?

Technology will play a crucial role. Managing millions of portfolios manually is simply not feasible—it requires automation and intelligent algorithms. Additionally, banks must invest in advisory capabilities and develop innovative investment solutions. 

Will this trend continue? 

Absolutely. The European Central Bank will continue on its rates cutting path, meaning cash reserves will no longer be as attractive. This will push many investors to put more capital back into the market.