Wells Fargo offered guidance this week in a note for investors navigating the next 18 months, highlighting five key portfolio ideas.
Looking ahead to 2025, Wells Fargo expects opportunities to broaden equity exposure during market downturns and potentially boost portfolio returns if rates remain high.
They also recommend considering “non-traditional asset classes” such as commodities and hedge funds for better returns and risk management.
Here are their top five portfolio ideas:
Buy the dip in big company stocks: Wells Fargo expects a possible market pullback due to the upcoming election and inflation concerns. They recommend that you use these dips to add to your US Large Cap stock positions, their preferred share class.
Lock in returns with longer-term bonds: With interest rates at multi-year highs, Wells Fargo sees an opportunity to monetize US Short Term Taxable Fixed Income. They suggest considering longer maturities to lock in attractive interest rates when yields reach the top of the range (4.25% – 5.00%).
Invest in growth sectors: Fueled by infrastructure spending and advances in AI, Wells Fargo recommends considering allocations in the energy, industrial and materials sectors. They also highlight data center REITs and energy companies that are poised to benefit from AI’s data storage and power needs.
Hedge uncertainty with alternatives: Alternative investments such as Relative Value and Event-driven strategies can provide diversification and potentially offset market volatility. Additionally, Wells Fargo sees private capital emerging as an attractive option due to trends like AI and lower valuations.
Hedging risks with geopolitical games: Given increased economic and geopolitical uncertainty, Wells Fargo proposes to hedge against the US dollar, US equities and fixed income. They also favor commodities and precious metals for their potential inflation hedge and to mitigate supply chain disruptions due to global conflict.
