Select your local site for products and services by region

Americas
Asia Pacific
Europe
Location not listed?
Equities

Is a supportive environment ahead for global equities?

July 01, 2025 - 5 min

Currently, we're in our weakest point of economic growth for 2025. So when you look at the back half of 2025, it's only going to get better. We're going to see a slight pickup in inflation. We're going to see a re-acceleration in economic growth. And most importantly, we're going to see a pickup in liquidity.

This is a trend we should see continue. We certainly saw it accelerate for the last 12 months. And a lot of that is the fact that we've just crowded in a lot of money from the rest of the world into US assets. Ironically, right now, US investors can actually pick up yield if they hedge out yen risk and invest overseas. And what we've seen is other foreign countries start to implement soft capital controls to prevent capital from flowing into the US. So I think it's going to happen in fits and starts. But we should see broadening economic growth around the rest of the world. As the rest of the developed world increases, deficits in the US start to slowly bring theirs down. It's a much healthier environment. So yeah, I expect to see non-US equities perform better than they have for the last decade.

I think the key in looking for opportunities in the market is just not US large cap. Certainly, there's a select group of large cap tech companies that still have bright futures. When we look at opportunities beyond the S&P 500, mid-caps stand out because they have the scale benefits that small caps don't. They have better valuations than large caps, and they have organic growth. I think what we're going to see going forward is these periodic episodes of what we call market violence, where we see strong sector rotation, spikes in volatility, as we see underlying narratives start to break down. That in and of itself gives active management a real opportunity to pick off very attractive investments across multiple sectors.

When we look at risk, it's easy to point to the geopolitical uncertainties that exist, but we need to understand those are temporary and short lived. And they'll be met with fiscal and monetary responses. I think the bigger risk is just investor complacency. There's going to be a lot of opportunities. There's going to be a lot of volatility. We're going to see rising liquidity levels. That may pressure equity risk premiums in certain sectors, but that's just born out of investor complacency.

Chris Wallis, Chief Executive Officer and Chief Investment Officer of Vaughan Nelson Investment Management, shares his thoughts on the opportunities and risks he sees in the months ahead, and why he believes a supportive environment is unfolding for global equity markets. Hear more about why he believes:

  • Opportunities exist beyond the S&P 500® Index, especially in the mid-cap space, because they have the scale benefits that small-caps don't, better valuations than large-caps and organic growth.
  • Non-US markets will continue to perform better than they have for the past decade, and broadening economic growth will take place globally.
  • There may be periodic episodes of market violence where strong sector rotation and spikes in volatility take place. This type of scenario would give active managers an opportunity to find attractive investments across multiple sectors. 
  • A potential combination of opportunity, volatility and rising liquidity levels may pressure equity risk premiums in certain sectors, born out of investor complacency. 

This material is provided for informational purposes only and should not be construed as investment advice. The analysis and opinion expressed represent the subjective views as of July 2025 and may change based on market and other conditions. There can be no assurance that developments will transpire as forecasted. Actual results may vary.

This material is not intended to be a recommendation or investment advice, does not constitute a solicitation to buy, sell or hold a security or an investment strategy; and is not provided in a fiduciary capacity. The information provided does not take into account the specific objectives or circumstances of any particular investor or suggest any specific course of action. Investment decisions should be made based on an investor’s objectives and circumstances and in consultation with his or her advisors.

All investing involves risk, including the risk of loss. Investment risk exists with equity, fixed income, and alternative investments. There is no assurance that any investment will meet its performance objectives or that losses will be avoided. Investors should fully understand the risks associated with any investment prior to investing.

Natixis Distribution, LLC is a limited purpose broker-dealer and the distributor of various registered investment companies for which advisory services are provided by affiliates of Natixis Investment Managers.

Natixis Distribution, LLC (fund distributor, member FINRA | SIPC) and Vaughan Nelson, LLC are affiliated. ALPS Distributors, Inc. is the distributor of the Natixis Vaughan Nelson Select ETF. Natixis Distribution, LLC is a marketing agent. ALPS Distributors, Inc. is not affiliated with Natixis Distribution, LLC.

NIM-06172025-ighjrpvt
NTX000926