Amundi Convictions

Discover how we translate market trends into investment views and opportunities in the second half of 2025

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The investment ride: driving growth, navigating change

Amundi's Investment Convictions H2 2025

In the second half of 2025, policy shifts, geopolitical pressures, and divergent growth paths continue to redraw the investment map.

Investors are navigating a complex environment where growth signals are mixed, inflation persists in some markets, and central banks are recalibrating their responses. At the same time, structural forces such as geopolitics, fiscal spending, and trade realignment are redefining how capital moves across borders.

While the outlook is far from uniform, most major economies have shown resilience.

In the United States, the Federal Reserve is expected to maintain a cautious stance amid weak demand and elevated debt levels. Europe’s increased focus on defence, including Germany’s commitment to boosting both investment and spending, is generating new momentumAcross emerging markets, the search for alternative supply chains and rising domestic demand is unlocking new opportunities, India being particularly successful in attracting defence and international IT companies thanks to its “Make in India” initiative.

Three macro themes are expected to shape global investment dynamics in the second half of the year. In this fragmented environment, a strong focus on risk mitigation, and selectivity across regions and sectors is paramount to building efficient portfolio strategies. The three macro themes are:

Our investment convictions

Tipping point for fixed income

Rising fiscal uncertainties in the United States are significantly increasing volatility in government bond markets. Investors will demand greater compensation for holding long-dated US Treasuries, causing yield curves to steepen. In this environment, diversifying* away from US bonds into European debt offers superior income and risk profiles. European investment-grade credit stands out due to its robust fundamentals and balanced supply-demand dynamics. Meanwhile, emerging market debt is poised to benefit from a weaker US dollar and attractive real interest rates.

Tipping point for fixed income

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Equities in the global trade rewiring

Equities are expected to deliver modestly positive returns in the second half of 2025; however, sector selection will be critical. Increasing tariffs will drive pronounced divergence between sectors, rewarding companies that are domestically focused and service oriented. We advocate diversification* away from heavily concentrated US mega-cap stocks, favouring European mid-caps and Japanese equities benefiting from corporate governance reforms. Additionally, sectors such as financial and communication services are preferred for their tariff resilience.

Equities in the global trade rewiring

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Time for Europe

Europe is becoming increasingly attractive for investors due to strategic investments aimed at achieving greater autonomy. Germany’s fiscal stimulus and Europe's broader infrastructure and defence initiatives underpin long-term growth prospects. Equities in Europe, especially attractively valued mid-cap industrial companies, and euro-denominated corporate bonds offer compelling opportunities amid stable credit fundamentals. 

Time for Europe

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India and EM winners of the rerouting shift

Emerging markets are poised to benefit from global supply chain shifts driven by changing geopolitical and trade dynamics. India and Indonesia, supported by strong domestic demand and growing tech sectors, are considered long-term winners. China, meanwhile, may benefit in the short-term from additional policy support. These economies are expected to outperform developed markets as investors seek exposure to dynamic growth engines aligned with structural changes.

India and EM winners of the rerouting shift

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Long-term themes in a fragmented world

Europe’s push for strategic autonomy, backed by fiscal expansion and structural reforms, is driving investment in defence, infrastructure, and clean tech—especially for mid-cap industrials—while evolving US-China competition continues to shape global supply chains and innovation trends. We favour euro-denominated corporate bonds, European industrials benefiting from these policies, and remain selective on Chinese tech assets, focusing on leaders with high barriers to entry.

Long-term themes in a fragmented world

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The case for diversification with multi-asset and alternatives

Private markets remain a key source of portfolio diversification*. Particularly attractive segments include private debt, supported by strong direct lending conditions, and infrastructure assets, which offer stable cash flows and inflation protection. Despite improved conditions for long/short equity and EM-focused strategies, hedge fund alpha remains constrained. 

The case for diversification with multi-asset and alternatives

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* Diversification does not guarantee a profit or protect against a loss.
Source: Amundi Investment Institute, Mid-Year Outlook - Ride the policy noise and shifts, June 2025.

Marketing material for professional investors only

 
Unless otherwise stated, all information contained in this document is from Amundi Asset Management S.A.S. and is as of September 2025. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi Asset Management S.A.S. and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not a guarantee or indicative of future results. 
 

Date of first use: September 2025
Doc ID: 4744936