Marketing communication
2025 Mid-year Outlook:
ETF implementation opportunities in
the great rewiring.
Amid the ‘great rewiring’ in global trade and geopolitics, our mid-year outlook outlines our key investment convictions for the second half of the year. Despite shifting alliances, a resurgence of tariffs and increased volatility, we believe investors could still unlock possible opportunities as economies adapt to these new realities.
Equities: Finding balance
Developed markets.
A few factors support the case for positioning beyond US mega-cap stocks, with Europe, Japan, US mid-caps and emerging markets (EM) all presenting potential opportunities.
You might consider Europe through a pan-European exposure or by looking at specific sectors. The region’s push towards reindustrialisation and greater strategic autonomy has created potential opportunities in both the European industrials and defence sectors. This comes as governments in Europe have committed to increase spending on infrastructure and defence in response to US President Donald Trump’s unconventional foreign policy.
In the US, we favour mid-cap stocks as many of these companies generate a greater share of their revenue domestically, which could offer some insulation from global trade tensions.
Elsewhere in the developed market (DM) universe, Japan has implemented market reforms that have helped unlock growth, potentially bringing Japanese high dividend and value stocks1 into play.
FAQs
What is capitalisation?
This refers to the total market value of a company's outstanding shares of stock. How are companies categorised based on capitalisation?
- Mega-cap: $200 billion and above
- Large-cap: $10 billion to $200 billion
- Mid-cap: $2 billion to $10 billion
- Small-cap: $300 million to $2 billion
What are some examples of companies that are mega-cap stocks?
ETF implementation:
Emerging markets.
Within EM assets, we see potential opportunities, both through a broad exposure and at a selective country level.
For the latter, Indian equities, including large-cap stocks, could be a compelling proposition, supported by strong economic growth and a trade deal with the US that is likely to help insulate the economy from tariffs.
A broad investment in emerging markets might also be worth considering, as it provides exposure to global engines of growth. Some of these, such as South Korea, appear relatively undervalued.
ETF implementation:
Fixed income: Seeking opportunities
Anyone considering investing in fixed income would need to watch inflation and how central banks are responding to it. Still, a discerning investor could find opportunities in government and corporate bonds - both of which may help build a more resilient portfolio.
The US Federal Reserve faces a delicate balancing act as it tries to avoid a recession. Our base case is for the Fed to cut interest rates three times by year-end.2 For US Treasuries, we favour intermediate (5-year) maturities. By investing in these Treasuries you could benefit from lower interest rates. This is because the price of existing bonds usually rises when rates fall1.
In the Eurozone, inflationary pressures have eased, and we expect two additional rate cuts this year2. In this climate, for Eurozone government bonds, we favour 7–10 year maturities, meaning we are constructive on duration. Given the likely path of European Central Bank (ECB) rate cuts, we see potential in holding bonds with a longer duration, in anticipation of more favourable interest rate movements in the future.
Investment grade corporate bonds appear well positioned in the current environment.1 We favour high-quality European corporate bonds and see selective opportunities in the US.1 Our preference for higher-quality corporate bonds is based on lower default risk and more stable historical returns1.
Bond basics
What are bonds?
These are instruments issued by governments, companies and other entities (the bond issuers). Bond investors (bondholders are essentially lending money to issuers. In return, investors receive a fixed interest rate from the issuer, hence ‘fixed income.’
What is maturity?
What is duration?
ETF implementation:
Responsible investment: Positioning for the future
With growing climate awareness, regulatory momentum, and evolving investor preferences, there are potential opportunities in both fixed income and equities.
Investing in European government green bonds, for example, could give investors confidence that some of their capital is contributing to financing the shift to a lower-carbon economy.
Meanwhile, listed companies demonstrating robust ESG practices may be better positioned to manage long-term risks and to capture growth from the previously mentioned structural shifts.
ETF implementation:
Conclusion
The rewiring of global trade and international relations has introduced more uncertainty into markets. It is therefore more important than ever for investors to make decisions that align with their personal goals, time horizons and risk tolerance.
Amundi offers a wide selection of ETFs across geographies, themes and asset classes that could be used to help you build your investment portfolio.
1.Past market trends are not a reliable indicator of future ones.
2.Source: Amundi Investment Institute, as of 17 June 2025.
Information on Amundi’s responsible investing can be found on amunietf.com and amundi.com. The investment decision must take inti account all the characteristics and objectives of the Fund, as described in the relevant Prospectus.
DISCLAIMER
It is important for potential investors to evaluate the risks described below and in the fund’s Key Information Document (“KID”) and prospectus available on our website www.amundietf.com.
KNOWING YOUR RISK
CAPITAL AT RISK - ETFs are tracking instruments. Their risk profile is similar to a direct investment in the underlying index. Investors’ capital is fully at risk and investors may not get back the amount originally invested.
UNDERLYING RISK - The underlying index of an ETF may be complex and volatile. For example, ETFs exposed to Emerging Markets carry a greater risk of potential loss than investment in Developed Markets as they are exposed to a wide range of unpredictable Emerging Market risks.
REPLICATION RISK - The fund’s objectives might not be reached due to unexpected events on the underlying markets which will impact the index calculation and the efficient fund replication.
CURRENCY RISK – An ETF may be exposed to currency risk if the ETF is denominated in a currency different to that of the underlying index securities it is tracking. This means that exchange rate fluctuations could have a negative or positive effect on returns.
LIQUIDITY RISK – There is a risk associated with the markets to which the ETF is exposed. The price and the value of investments are linked to the liquidity risk of the underlying index components. Investments can go up or down. In addition, on the secondary market liquidity is provided by registered market makers on the respective stock exchange where the ETF is listed. On exchange, liquidity may be limited as a result of a suspension in the underlying market represented by the underlying index tracked by the ETF; a failure in the systems of one of the relevant stock exchanges, or other market-maker systems; or an abnormal trading situation or event.
VOLATILITY RISK – The ETF is exposed to changes in the volatility patterns of the underlying index relevant markets. The ETF value can change rapidly and unpredictably, and potentially move in a large magnitude, up or down.
CONCENTRATION RISK – Thematic ETFs select stocks or bonds for their portfolio from the original benchmark index. Where selection rules are extensive, it can lead to a more concentrated portfolio where risk is spread over fewer stocks than the original benchmark.
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