ETF investing ideas for a soft landing in 2025

The 2025 investment outlook anticipates a soft landing for the global economy, with an initial slowdown in growth followed by reacceleration later in the year. Inflation is nearing target levels in most developing markets, and central banks are easing monetary policies to stimulate growth. This creates a favorable environment for risk assets, particularly in non-US developed markets, US small-cap stocks, and value sectors. Emerging markets are expected to perform well, driven by rate cuts in developed markets and potential policy stimulus in China.

Investors are encouraged to use ETFs to align their portfolios with these economic projections. Small-cap and equal-weight equity ETFs are recommended for growth potential, while senior loans in fixed income offer attractive valuations. Commodities are suggested for diversification and inflation hedging. Key ETF picks include small-cap (XSVM, DWAS) and large-cap equities (RSP, RSPA, RWL), international development (EFAA), and emerging markets (CQQQ).

In fixed income, while current yields are attractive, spreads are unlikely to tighten further, with top ETF choices being BKLN, VRP, GTO, and BulletShares. Alternatives such as PDBC, DBB, BTCO, BLKC, and SATO are highlighted for diversification and inflation protection. Thematic secular trends are another focus, with ETFs like KBWB, PPA, and IGPT recommended to capitalize on long-term societal shifts.

Overall, the guide suggests a risk-on approach globally, emphasizing small-cap and value equities, while maintaining diversification through fixed income and alternative investments.