10 Best Investments to Watch in 2025
By Kate Stalter, Edited by Aaron Davis
May 2, 2025
As investors adjust their portfolios amid fluctuating market conditions, attention is increasingly directed toward diversification as a strategy to mitigate risks associated with specific sectors. With the investment landscape continuing to evolve in 2025, several assets have emerged as notable opportunities, despite the accompanying risks.
Key Takeaways
- Gold and Utilities: Assets like gold and utility stocks are currently favored by investors seeking safety and reliable returns.
- Emerging Markets and Commodities: As inflation persists and the dollar weakens, attention is shifting towards emerging markets and commodities.
- High-Yield Bonds and Private Credit: These avenues may provide higher income potential but also come with increased risks.
Market Overview
The recent volatility in the stock market showed little sign of abating as equities surged back, particularly with growth sectors leading the charge. Optimism surrounding a potential easing of global trade tensions has contributed to this upward trajectory, with small-cap stocks—historically viewed as risk-on assets—also gaining prominence.
However, financial planners and professional investors are urging caution amidst persistent uncertainties. Here’s a breakdown of the ten asset classes currently garnering investor attention:
1. Gold
Gold has a historical tendency to perform well during periods of equity market instability. Its appeal as a safe-haven investment has contributed to a significant price increase, with the SPDR Gold Shares ETF (GLD) witnessing a rise of over 20% year-to-date, outpacing the S&P 500. Michael Wagner, co-founder of Omnia Family Wealth, cautions that while gold can offer stability, it’s crucial not to over-invest due to its volatile nature.
2. Utilities Stocks
In a surprising turn, utility stocks have outperformed other sectors, with the Utilities Select Sector SPDR ETF (XLU) generating a 5% return this year. These stocks tend to be seen as safe bets, particularly during market downturns, due to their ability to pass higher costs onto consumers. Furthermore, expectations surrounding the energy requirements for powering artificial intelligence applications have fueled additional growth opportunities.
3. Thematic ETFs
Thematic exchange-traded funds (ETFs) continue to attract attention as fund managers try to capitalize on emerging investing trends. One prominent example is the ARK Innovation ETF (ARKK), which focuses on companies involved in “disruptive innovation.” Despite its past successes, analysis suggests a cautious approach towards thematic ETFs, as many may come with higher costs compared to traditional index funds.
4. Emerging-Market Equities
Amidst a pullback in U.S. stocks, emerging-market ETFs such as the Vanguard FTSE Emerging Markets ETF (VWO) have gained traction, enabling gains even as other markets falter. Analysts point to the resilience of the technology sector in emerging markets, particularly in China, as a pivotal factor for these investments.
5. Private Credit
Private credit has emerged as a viable option for businesses seeking financing outside the traditional banking framework. This asset class offers higher yields but is also inherently riskier. The SPDR SSGA IG Public & Private Credit ETF (PRIV) has become accessible to individual investors. However, experts advise caution, particularly with highly leveraged companies that may be vulnerable in a slowing economy.
6. Private Equity
Private equity investments, which involve purchasing companies that are not publicly listed, are now more accessible due to recent market developments. The Invesco Global Listed Private Equity ETF (PSP) allows individuals to partake in this asset class. However, Joshua Mangoubi, Chief Investment Officer at Considerate Capital, advises investors to be selective, as elevated company valuations and economic instability pose challenges for potential returns.
7. Commodities
With inflation concerns remaining at the forefront, commodities are gathering increased investor interest. Although prices for various commodities have seen fluctuations, they may provide a hedge against inflationary pressures.
8. High-Yield Bonds
High-yield bonds are attractive for income-seeking investors, often yielding more than traditional bonds. However, the increased risk associated with these investments requires careful examination, as defaults may rise in a challenging economic environment.
9. Real Estate
Real estate remains a potentially rewarding investment avenue, particularly as the effects of inflation continue to impact market dynamics. Investors should look closely at specific real estate sectors, as opportunities can vary significantly by location and property type.
10. Cash and Cash Equivalents
Holding cash or cash equivalents may seem conservative, but it can provide a cushion in volatile markets. This liquidity allows investors to take advantage of emerging opportunities as they arise without having to sell other investments at a loss.
Conclusion
As we move through 2025, it is clear that while certain assets present promising opportunities, the landscape remains fraught with risk and uncertainty. Investors are encouraged to conduct thorough research and consult with financial advisors to align their investment strategies with their individual risk tolerance and financial goals.
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