Core Insights - The article highlights a significant trend in 2025 where diversified investment strategies achieved strong returns, despite a general shift away from these strategies by investors [2][11][15] - Retail investors have been moving away from balanced and multi-asset funds, leading to 13 consecutive quarters of outflows in traditional blended strategies [7][15] - There is a growing concern among strategists that the abandonment of diversification could expose portfolios to risks, especially in a market characterized by high valuations and concentration in technology stocks [5][15] Investment Trends - Value-oriented equity ETFs attracted over $56 billion in inflows in 2025, marking the second-largest annual inflow since at least 2000, indicating a shift towards value investing [11][16] - Small-cap and international stocks are expected to outperform, with strategists predicting a broadening of US earnings growth into 2026 [12][16] - Alternative assets, including private credit, infrastructure, and digital assets, are gaining traction as investors seek exposure beyond traditional public markets [14][16] Market Dynamics - The 2022 bond market turmoil, driven by aggressive central bank tightening, has negatively impacted investor confidence in fixed income as a stabilizing asset [8][16] - The article notes that despite the focus on AI and tech, 2025 was characterized by a broader trend of global diversification rather than a singular focus on stocks [2][15] - There are indications of market froth, with some strategists warning that current market conditions may not align with fundamental valuations [13][16]
Big year for old school Wall Street trades gets lost in AI hype
The Economic Times·2025-12-20 11:06