The firm has encouraged investors to pursue “alternate routes” in the face of slowing global growth, persistent inflation and a complex monetary environment.
In its Q4 2025 outlook, Nuveen said that while the Federal Reserve’s return to rate cuts has provided clarity on the policy front, the pace and impact of further easing remain uncertain, with divergent outcomes likely across asset classes.
“Diversified, long-term investors face the ongoing task of assessing which asset classes and allocation strategies are most likely to put them on the road to successful portfolio outcomes,” said Saira Malik, chief investment officer and head of equities and fixed income at Nuveen.
“The path is typically neither static nor in a frenzied flux over long periods but instead tends to wind through an evolving economic and market landscape shaped by cyclical and secular forces.”
Malik said the current environment demanded balance, with neither purely conservative bond exposure nor excessive equity risk appearing optimal.
“Staying on the sidelines holding large amounts of cash, rarely a winning long-term strategy, looks even less productive with interest rates now on a downward path,” she said. “At the same time, overexposure to equities without a focus on fundamentals or meaningful acknowledgment of risks may also be problematic.”
Nuveen’s committee highlighted five investment themes for 2025, pointing to opportunities across non-US.
Treasury fixed income sectors such as securitised assets, senior loans, emerging markets debt and private credit. It also saw value in municipal bonds, real estate, US large cap equities and energy-related infrastructure.
The firm said that while economic deceleration had taken hold globally, the risk of recession remained low, with manufacturing activity improving and fiscal stimulus providing a tailwind.
However, it warned that fiscal pressures may keep long-term yields elevated even as the Fed cuts rates.
Real assets remained a central focus of the outlook, with the committee identifying positive turning points in commercial real estate and infrastructure linked to the growing energy and AI demand boom.
“Selectivity and thoughtful portfolio construction are as critical to our outlook as the principle of broad diversification,” Malik said. “Not all roads lead to Rome, or to winning investment performance.”
Within equities, Nuveen maintained a positive stance on US large-cap equities, driven by continued dominance in technology and the AI-related productivity cycle.
The report added that while some investors may be looking to reduce US exposure, the country still remained the primary beneficiary of AI-driven structural growth.
Fixed income investors were urged to prioritise relative yields and credit selection rather than duration, while municipal bonds were described as offering “excellent value opportunities” after underperformance caused by rising supply.
Private credit, the report said, continued to attract robust deal activity, particularly in middle market loans with conservative structures.
“Alternate routes may sometimes take investors off the beaten path,” Malik said. “But in today’s environment, that’s often where the most compelling opportunities can be found.”
