According to Quilter Investors’ latest Investor Trends Survey, fund groups overwhelmingly expect the United States to be the best performing equity market in 2025, with most expecting Donald Trump’s second term to provide a boost.
Just shy of four in ten respondents expect the US to be the best performing region in 2025, showing more consensus than for any other region. China and Japan received some support (16.7% each), with only 5.6% of respondents expecting Europe to outperform and just 12.5% for the UK.
In contrast, Europe is widely seen as being the weakest performing region in 2025 (37.5%) followed by Japan (18.8%), after it had a successful run in 2024 following its breakout from its slumber.
In 2025, which region do you believe will offer the best and worst index returns?
| Best | Worst | |
| US | 38.9% | 12.5% |
| Europe ex UK | 5.6% | 37.5% |
| UK | 11.1% | 12.5% |
| EM | 11.1% | 6.3% |
| China | 16.7% | 12.5% |
| Japan | 16.7% | 18.8% |
The survey also revealed that despite already receiving a little boost from Donald Trump’s election victory at the beginning of November, fund managers overall see the positive trend for stock markets continuing. Asked to rate his potential impact on markets on a scale from +5 for most positive, to -5 for most negative, respondents averaged at +1.
However, as an indication of how volatile fund managers are expecting Trump’s presidency to be, the responses range from scores as high as +5 to as low as -2. Much of this may be down to the as yet unknown extent of his trade tariff regime and what effect this will have on inflation.
The survey, which was sent to 21 of the leading fund management institutions representing £22 trillion of assets, is carried out on a quarterly basis and covers forecasts for macroeconomic data and timely indicators.
Participants were also asked about bigger picture issues, such as changing demographics and artificial intelligence (AI). Despite plunging birth rates and aging populations altering the makeup of demographics, and thus economics, in developed countries, fund managers are yet to respond. More than six in ten (61.5%) of respondents said it had little bearing on their current allocations, with less than a quarter (23.1%) saying it had a more significant impact. However, just 14% expect demographics to have no bearing on allocations in the future, compared to 35.7% predicting it will have more of an impact on decision making.
Meanwhile, AI has often been heralded as the silver bullet to productivity issues and the shift in demographics. From a business perspective, while the use case for AI has not yet been fully proven, fund managers are expecting it to have some sort of positive impact on corporate profitability by 2030, with six in ten (60%) believing that will be the case.
Lindsay James, investment strategist at Quilter Investors, said:
“It is perhaps unsurprising to see the US coming out on top of the expected returns table from leading fund managers. It has proven to be an incredibly resilient economy that has been able withstand the high interest rate environment. Coupled with Donald Trump’s re-entry into the White House, where he has promised increased fiscal spending and deregulation, conditions look ripe for a stock market boon.
“However, Trump and his economic policies threaten to throw a spanner in the works over the long-term. Isolationist policies have a history of driving up inflation and with it interest rates. For a man who wants the stock market to be a barometer of his success he will not want to drastically upset investors by causing any share price corrections. It will be a fascinating balance to watch him try to achieve.
“Europe, meanwhile, looks to be the sick man of the world economy. Outside of China it is most exposed to the threat of trade tariffs with the US, and economic output is already looking challenged before Trump has even taken office.
“Demographic changes are not helping European nations and you unfortunately have a cocktail for higher fiscal requirements and thus higher taxes. It was surprising, therefore, to see fund managers not think demographic change needs to be accounted for in portfolios now. The makeup of the world is changing rapidly and there will come a point for many governments and corporates where it is too late to adapt their strategy and instead be in damage limitation mode. It would not be a surprise to see this issue rise up the agenda for asset managers in the coming years.”
