10 key investment strategy stories of 2024

The investment outlook for 2025 changed rapidly during a few weeks in the latter part of 2024.

First, in September, the Federal Reserve announced the start of its long-awaited interest rate cuts. The initial half-point drop was the first in a series of Fed decisions as it attempted to achieve a so-called “soft landing” for the economy.

Then, on Election Day in November, Donald Trump won a decisive victory over Democratic candidate Vice President Kamala Harris and will retake the White House next month. His Republican Party then proceeded to retake the U.S. Senate and eventually did the same in the U.S. House of Representatives. The Republican sweep of the levers of power was complete.

The effects of these changes on portfolios will be felt for years. For starters, the 2017 Tax Cuts and Job Act (TCJA) will almost certainly be extended beyond 2025.

READ MORE: Advisors, clients want to know where the gold is at in 2025

In addition, sectors seen as benefiting from the expected de-emphasis on regulation and governmental scrutiny are looking to benefit in the coming year. This was seen in the immediate aftermath of the election results, which was dubbed the “Trump trade” at the time. Meanwhile, areas that are particularly sensitive to tariffs are expected to have a more difficult time under the new administration.

On its face, the ascendancy of a GOP government takeover in Washington would seem to be a net negative for sustainable investments and environmental, social, and governance (ESG) initiatives. But the regulatory and legislative changes that have locked into place over the past few years have created a favorable environment for these investments that will be hard to uproot — however much a newly reinvigorated Republican Party might push for the opposite.

READ MORE: Expert predictions for wealthtech and financial planning in 2025

Small- and mid-cap funds have been given a boost by these pieces of news, after years of trailing large-cap counterparts. Some larger players may be overdue for a correction, while smaller entrants may benefit from increased mergers and acquisitions activity.

The profile of cash in portfolios received renewed attention in 2024, as solutions came online that allowed higher returns than previously attainable. This was especially true as investors waited for the Fed’s interest rate decision.

The Fed’s change of course also meant yields on money market funds are shrinking. Short-term bonds suddenly became more attractive to investors.

Alternative investments also gained increased prominence by 2024. Barriers to entry that previously allowed only high net worth and ultrahigh net worth investors to take advantage of opportunities began to drop. Fractional ownership of alternative assets and newer platforms gave investors with fewer resources a seat at the table as well. Others remain skeptical about these alternatives to a traditional portfolio and the promises of their ability to outperform expectations.

READ MORE: Sustainable investors expect sector growth, but not from them

Scroll down for a roundup of some of FP’s biggest investment strategy stories this year: