Investment experts highlight opportunities in consumer staples, defense, European luxury brands and more.
It’s a good time for investors to be light on their feet.
As the new year unfolds, the question of whether to stay aggressive or temper expectations is on the minds of many with money in the financial markets. That includes investment experts sharing ideas with Bloomberg News about where to find a profitable home for $10,000.
The S&P 500 has notched total returns of 25% or more two years in a row, stoking fears that the tech stocks propelling the index will sputter.
“The reward you’re getting for taking on risk has shrunk quite a bit over the past 12 months” in some areas, said Philip Straehl, Morningstar Wealth’s chief investment officer for the Americas.
Straehl isn’t counseling a retreat from stocks, however. He and other advisers surveyed by Bloomberg News are exploring investments with what they say are more appealing risk-reward profiles than the most popular stocks, including pockets of international equities and less glamorous sectors of the US stock market like healthcare.
When the experts were asked how they’d spend a $10,000 windfall outside of the investment world, the focus was on experiences, ranging from a trip to the charming town of Vitznau on the shores of Switzerland’s Lake Lucerne to funding ski adventures in Japan. Staying put and devoting money to personal and professional growth with a management coach was another choice.
For investors who want to invest in the experts’ themes using exchange-traded funds, Bloomberg Intelligence ETF research associate Andre Yapp points to funds that can serve as rough proxies.
Ian Harnett, chief investment strategist, Absolute Strategy Research
Buy Bessent’s ‘Three Arrows’
The idea: The decisive election victory by President Donald Trump has provided greater clarity about some of the macro factors likely to drive financial markets through 2025. Rather than focus on tariffs, immigration or cutting back government, we think the investment focus should be on the “three arrows” that President Trump’s pick for Treasury Secretary, Scott Bessent , has outlined. Bessent proposed that the US should commit to 3% real growth in gross domestic product, reducing the government deficit to 3% of GDP and boosting energy production by the equivalent of 3 million barrels per day.
The strategy: Clearly, delivering on these will be tough. But as an indication of what the new administration will want to achieve, it is clear that keeping GDP growth strong will be central to their plans. Given that the economy is already operating above trend, this also suggests some upward pressure on wages and prices.To offset upward pressures on service sector inflation, lower energy prices will be critical. Some people might have dismissed the “drill-baby-drill” narrative of President Trump during the campaign. But we see increased energy output as being the most critical part of the Bessent “three arrows.” Increased energy production directly boosts economic output, while lower energy prices boosts demand for both companies and households. It might also lead to an improvement in the trade balance.Within equities we focus on areas that might benefit the most, such as:
Construction companies, which should get a boost from capital expenditures on new factories built to replace production of tariff-hit imports
Real estate investment trusts related to the buildout of data centers needed to drive AI growth
Energy technology companies and service providers that will be critical to increased energy output
In addition, specialist US defense companies should gain from increased global defense spending.
The big picture: With expected rate cuts by the Fed and an administration committed to boosting growth and cutting taxes, we expect US corporate earnings to remain strong, which will help support US equities.
How to ETF it
Bloomberg Intelligence’s Yapp points to the Tema American Reshoring ETF (RSHO) and First Trust RBA American Industrial Renaissance ETF (AIRR) as ways to play Harnett’s reshoring theme. For data centers, there is the Global X Data Center & Digital Infrastructure ETF (DTCR) and the Pacer Data & Infrastructure Real Estate ETF (SRVR). Complementing those ETFs is the Range Nuclear Renaissance Index ETF (NUKZ), which tracks companies involved in the nuclear fuel and energy industry, which is expected to benefit from America’s insatiable need for energy to power industry and personal devices. Additionally, the Global X Defense Tech ETF (SHLD) is a great way to gain exposure to aerospace and defense companies, as well as other companies connected to that theme, said Yapp.
Last period’s ETF performance
The Invesco Dorsey Wright Consumer Cyclicals Momentum ETF (PEZ) fell 1.3% since the last Where to Invest $10,000 story ran, while the Invesco S&P SmallCap Consumer Discretionary ETF (PSCD) rose 2.7%. The Industrial Select Sector SPDR Fund (XLI) and iShares Global Industrials ETF (EXI) fell 1.1% and 1.7%, respectively. The FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund (TLTD) dropped 2.5% and the Invesco DB Base Metals Fund (DBB) lost about 8%.
Alternate idea
One of the most important investments in myself I ever made was working with a personal management coach. I was put into a senior leadership role at an early age, and my employer was keen to provide accelerated management learning. In my early 30s I learned how to manage myself, my work, and others from a coach who had worked in a range of countries and industries. Without that input I wouldn’t have had the toolkit to build my career and launch a business that has won multiple awards. Investing the time and energy in that process was life-changing. Even better, over the years we worked together, my coach has become a great friend who remains, 30 years later, a great source of support and encouragement.
Article in full: How to Invest $10,000 Right Now
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