Janus Henderson Has Four Tips for Investors With Cash to Spare in 2025 | Global News Avenue

Fed expected to cut interest rates further in 2025, investors excess cash exist money market funds and High Yield Savings Account May be looking to redeploy funds.

At Janus Henderson’s investment outlook event last week, analysts at the asset management firm recommended allocating cash to small cap stocksinternational stocks and bonds with short or medium term maturities.

Here’s why.

Small-cap stocks could get a boost from lower interest rates

Lower interest rates are widely believed to boost small-cap valuations, as smaller companies typically have more debt than their larger peers.

Russell 2000 (estrusThe small-business index has gained more than 18% since the start of the year and has risen more than 9% since the Federal Reserve cut interest rates for the first time in more than four years in September. But the benchmark S&P 500 index is up even more in 2024, rising about 27%.

Marc Pinto, head of Americas equities at Janus Henderson, said small-cap stocks “have been left behind after the big-cap boom.” “We think this is also an asset class that’s well suited to active management.”

Consider revamping your 60/40 portfolio

Adam Hetts, the firm’s global head of multi-asset, recommends adding a little risk to traditional investing 60/40 Equity and Fixed Income Portfolio.

He recommends a 63/37 portfolio, tilting further toward U.S. equities with the help of more small and mid-cap stocks.

“We think we have a good horizon in terms of timing for rate cuts to pass through to a stabilizing economy and then pass through to more rate-sensitive industries and boost small and mid-cap stocks,” Hertz said.

While he advocates cutting fixed income, he said bonds can provide a “margin of safety” if a recession does occur.

Interest rates fall, but fixed income still has opportunities

Although the Fed has cut interest rates by 75 basis points this year, yields treasury bills Basically remain within the range of 4% to 5%.

As a result, Jim Cielinski, global head of fixed income, is optimistic about short- and medium-term bonds.

“If you’re worried about re-ignition, tend to shorten the duration” inflationary“If inflation rises, the Fed may respond by raising the federal funds rate again,” Silinski said.

longer –period For those who need bonds, bonds may be a good option Hedging in their portfolio, he said.

International stock markets could make a comeback

While U.S. stocks have performed well this year, international stock markets have had a mixed performance.

Case in point: The Fidelity Global Ex-U.S. Index Fund, which tracks the performance of large- and mid-cap stocks in international markets outside the United States, is up just 9.5% in 2024, lagging the S&P 500 by a wide margin.

Pinto sees opportunities in developing and emerging markets and noted that there are international companies focused on topics the company is bullish on, such as artificial intelligence and health care, although he also issued a warning.

“People have been waiting for the year when international equities truly surpass U.S. equities, but maybe that day will never come,” Pinto said.