Times will suit active managers says T. Rowe Price

Mike Taylor

Managing Editor/Publisher, Financial Newswire

12 June 2025

Investors are being predicted to look beyond US equities and mega-cap tech stocks over the next six months, according to the 2025 mid-year Investment Outlook from global investment management firm, T. Rowe Price.

And it is an environment that the company believes will suit active managers with the note that Australia is not immune to global trade uncertainty but is relatively defensively positioned in the near term.

The company’s outlook for global financial markets for the remainder of 2025 is one which reflects the impacts of events being driven out of the US.

The T. Rowe Price narrative is that underpinning the outlook for the next six months is “an accelerated trend towards deglobalisation, a tariff-driven reconfiguration of global trade, an expected broadening of stock market opportunities globally beyond US equities and mega-cap stocks, and a bond market regime change driven by trade policy changes and German fiscal expansion”.

According to T. Rowe Price the ey takeaways from the 2025 Midyear Market Outlook include:

• Economics: The global economy is under pressure from multiple directions. Trade war fallout could slow the global economy. U.S. fiscal and tax policy will likely take center stage in the second half of the year. Expect rising costs for businesses and a reduction in consumer purchasing power.
• Equities: The broadening of equity markets should continue, reducing the U.S./mega-cap market concentration of recent years in favor of value stocks and select emerging markets.
• Fixed income: The fundamental shift in the global fixed income landscape is manifested in above-target inflation in some developed markets, especially the U.S. Corporate bonds are likely entering an economic downturn with historically high credit quality, positioning them more defensively than in the past.
• Multi-asset: Inflation protection and equity diversification will receive renewed emphasis in T. Rowe Price multi-asset portfolios. Inflation protected bonds and real assets can provide effective hedges against expected inflation. More attractive valuations signal favoring international and value equities in determining multi-asset portfolio allocations.

The analysis said that while there would continue to be a place for both active and passive management in investors’ portfolios, the challenging market environment, including higher interest rates, more volatile markets, and greater policy uncertainty, supports the conditions for active managers to outperform.

1. Rowe Price sector portfolio manager dealing with Australian equities, Tom Shelmerdine said that while Australia is by no means immune to global trade uncertainty, the firm saw it as being relatively defensively positioned in the near term.

“Australia has low direct exposure to U.S. tariff policy; rather, it is wholly dependent on China through commodity exports and therefore could benefit from any countercyclical domestic stimulus response from China. Furthermore, the Australian domestic economy is proving resilient with a ‘Goldilocks’ backdrop of ongoing fiscal spending and a supportive monetary easing cycle,” he said.

“This all suggests tailwinds for Australian stocks, which are back to all-time highs. However, the longer-term challenge for Australia remains the structural downturn in commodity export revenues (iron ore, liquefied natural gas, coal) and associated fiscal pressures, which would lead to pressure on the Australian dollar. For now, however, the backdrop looks supportive.”