Despite market volatility in December, the fourth quarter of 2024 showcased the continued dominance of US equities, particularly in the Large Cap Growth segment, which posted an impressive 7.1% gain. This outperformance came amid significant market divergences, with developed international markets declining as the U.S. dollar strengthened and fixed income markets struggling as the 10-year Treasury yield climbed to 4.6% on worries about inflation and rising government debt. The U.S. economy demonstrated remarkable resilience, with strong holiday consumer spending and robust labor market data. However, persistent inflation prompted the Federal Reserve to maintain a more hawkish stance even while implementing its third consecutive rate cut to 4.25-4.5%. Given the combination of strong economic fundamentals and ongoing policy challenges, markets appear poised for continued complexity as we enter 2025.

The “Magnificent 7” tech giants—Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta, and Tesla—dominated the investment landscape in 2024, driving an outsized share of the S&P 500’s return. Company fundamentals, in aggregate, have been key drivers of this success, as seen by significantly higher revenue growth and profit margins. At the forefront of the AI revolution, these companies are powering breakthroughs in critical areas like advanced AI hardware and emerging AI agents, further cementing their dominance. Yet, as valuations soar and questions linger about the return on massive investments in innovation, the stakes have never been higher, especially given the concentration they hold within the major indices. Dive into how these titans are redefining the future—and what it means for investors.

Read our assessment here.

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In 2024 credit became exciting again. Higher base rates, combined with healthy company fundamentals and strong consumer spending, meant that credit-focused investment managers were able to deliver robust performance without needing to take on much additional credit risk.¹

Looking ahead to 2025, ample investor liquidity, continued appetite for yield, and general optimism around the U.S. economy make the broader credit markets appear expensive. Idiosyncratic opportunities to seek alpha will persist, though. In this research note we highlight macro themes that we believe could lead to interesting investment opportunities. We also provide a few supporting case studies from our credit manager partnerships and a brief appendix covering the foundations of investing in distressed debt. Key points are summarized below. (Please see our full length report for accompanying charts and data sources, as well as important disclosures).