LGT Asset Class Scorecard (FVT) PDF Free Download
1 / 3/3
100%
1/3
Quarterly FVT output: May 2025
Fixed Income
Rates
▪ Inflation remains sticky and above the Fed’s target of
2% due to tariff- driven pressures and goods disinflation
fading. Services inflation continues to keep overall
inflation elevated.
▪ Unemployment continues to rise, now approaching
4.3%, with hiring and wage growth weakening. The
Fed remains unlikely to cut rates without a material
deterioration in growth or inflation data.
▪ Treasury bonds remain modestly cheap, though foreign
demand has dropped, supporting the current cheap
valuation.
▪ Volatility is elevated, driven by tariff and inflation
uncertainty, fiscal policy, and the post-election policy
environment.
Investment grade credit
▪ Spreads have recently widened from historical lows and
are now above longer-term averages.
▪ Corporate fundamentals remain solid with profit
margins (EBITDA) improving, especially for investment-
grade issuers.
▪ Leverage and interest coverage (ability to pay interest)
have stabilised at historically resilient levels. Near-term
refinancing risk is low, with less than 7% of index
maturities falling in 2025.
▪ ETF inflows have slowed, and issuance remains light.
▪ Relative performance versus government bonds has
stalled, particularly for benchmark duration corporates.
High yield (HY) credit
▪ High-yield issuers have shown resilience, with revenue
growth of 2.6% and EBITDA growth of 3.8% YoY in Q4
2024 ex-energy, driven by gaming and leisure sectors.
▪ Defaults remain low but are expected to rise toward
2.8% in 2025.
▪ Behavioural signals, such as equity-friendly issuance,
indicate the market is approaching later stages in the
credit cycle.
▪ Amidst recessionary concerns, spreads have widened.
▪ YTD ETF inflows have slowed, and issuance is down
11.5% YoY.
LGT Asset Class
Scorecard (FVT)
2/3
Equities
US
▪ US GDP growth is forecast at 2.0% for 2025, supported
by consumer spending and business investment.
However, recent data, such as retail sales and PMIs,
show signs of softening, suggesting a shift toward
‘stagflation-lite’ environment.
▪ Earnings estimates for 2025 are still forecast to grow at
9-10% YoY, led by tech, financials, and industrials.
However, only 30% of companies are seeing earning
upgrades and 53% of pre-announcements have been
negative, the highest since early 2023, which indicates
weakening confidence.
▪ Inflation remains sticky, weighing on business and
consumer sentiment. The Fed has yet to confirm cuts,
and fiscal stimulus is fading, and the combined policy
stance remains tight, limiting upside for rate-sensitive
sectors.
▪ The S&P 500 is trading at 21.5x forward P/E, above the
30-year average of 16.9x. This premium looks
increasingly vulnerable as earnings expectations soften.
▪ Value and momentum are now outperforming, small
caps are underperforming.
Europe
▪ GDP growth forecasted at 1.1%-1.2% for 2025,
Germany and France are underperforming due to weak
manufacturing activity.
▪ Eurozone equities trade at 14.2x forward P/E, above
historical average but still offering a 33% discount to
US equities.
▪ Growth has turned positive in Europe, led by Germany,
Spain, and Sweden. 2025 earnings growth is forecast to
grow +8.0% (vs -0.4% in 2024), driven by Aerospace,
Chemicals, Industrials.
▪ Eurozone equities now outperforming all major regions.
▪ UK continues to lag amid local demand weakness and
inflation.
Emerging markets
▪ GDP growth is now expected to be 4.0% in 2025, as
easing monetary policy in developed markets, a shift in
supply chains and domestic demand in Asia help
support growth.
▪ Equities trade at a forward P/E of 12x, well below
developed market peers, a compelling valuation despite
short-term risks.
▪ EM and Asia show weak short term technicals but are
flashing buy signals across medium term which is usually
early evidence of bottoming.
Japan
▪ GDP is forecasted to grow 1.0-1.2% in 2025, driven by
domestic demand and a competitive yen. Japan
continues to be a rare developed market beneficiary of
global disinflation and easing financial conditions.
▪ Earnings growth revised down to 5.5% (from 8%),
mostly due to autos and machinery weakening.
▪ Strength in consumer demand, housing and services
and wage growth at strongest in decades all point to
Japan seeing domestic consumption and becoming a
growth play.
▪ Japan trades at a forward P/E of 14.6x, significantly
below US and Global markets, with attractive dividend
yields and share buybacks supporting valuations.
▪ Medium and long-term signals remain positive; short-
term momentum weakened due to recent market
pullback and rotation.
▪ Ongoing reforms, reductions in cross-shareholdings,
and stronger buyback/dividend discipline remain multi-
year catalysts.
▪ Structurally improving market.
3/3
LGT Wealth Management UK LLP is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales:
OC329392. Registered office: 14 Cornhill, London, EC3V 3NR.
LGT Wealth Management Limited is authorised and regulated by the Financial Conduct Authority. Registered in Scotland number
SC317950 at Capital Square, 58 Morrison Street, Edinburgh, EH3 8BP.
LGT Wealth Management Jersey Limited is incorporated in Jersey and is regulated by the Jersey Financial Services Commission in the
conduct of Investment Business and Funds Service Business: 102243. Registered office: Sir Walter Raleigh House, 48-50 Esplanade,
St Helier, Jersey JE2 3QB.
LGT Wealth Management (CI) Limited is registered in Jersey and is regulated by the Jersey Financial Services Commission: 5769.
Registered Office: at IFC1, The Esplanade, St Helier, Jersey, JE1 4BP.
LGT Wealth Management US Limited is authorised and regulated by the Financial Conduct Authority and is a Registered Investment
Adviser with the US Securities & Exchange Commission (“SEC”). Registered in England and Wales: 06455240. Registered Office: 14
Cornhill, London, EC3V 3NR.
This publication is marketing material. It is for information purposes only. Certain services described herein are not available to retail
clients as defined by the FCA or the JFSC, as applicable; please speak to your investment adviser for further clarification in this regard.
All services are subject to status and where local regulations permit. The wording contained in this document is not to be construed
as an offer, advice, invitation or solicitation to enter into any financial obligation, activity or promotion of any kind. You are
recommended to seek advice concerning suitability from your investment adviser. Any information herein is given in good faith, but
is subject to change without notice and may not be accurate and complete for your purposes. This document is not intended for
distribution to, or use by, any individual or entities in any jurisdiction where such distribution would be contrary to the laws of that
jurisdiction or subject any LGT Wealth Management entity to any registration requirements. When we provide investment advice it is
on the basis of a restricted approach that is to say, whilst we review and advise on retail investment products from the whole of the
investment market.
Investors should be aware that past performance is not an indication of future performance, the value of investments and the income
derived from them may fluctuate and you may not receive back the amount you originally invested.
