Our sector analysts are always on the lookout for opportunities, evaluating companies, and making recommendations behind the scenes. So, what’s on their radar this year? Here’s what they have to say.

Fixed Income Sector

The starting point for base rates across fixed income markets is as attractive as it has been for 15-20 years. Investors are finally being fairly compensated for inflation expectations and an attractive real interest rate in fixed income markets. If Treasury yields remain in their current range, the yield on fixed income portfolios could become competitive with achieving many long-term objectives. Should the economy soften modestly with inflation decelerating closer to the 2% target and employment remaining stable, fixed income portfolios could earn an attractive carry with some modest capital appreciation from yields moving lower. This may result in attractive risk-adjusted returns compared to many other asset classes through 2025.

Brad Cronister, CFA®, Senior Fixed Income Research Analyst

Technology Sector

Despite very strong sector performance for two years running, we see four themes heading into 2025 and have positioned ourselves accordingly.

1. The market could broaden out: Since 2022, the market has been driven by gains in a very narrow set of stocks collectively referred to as the “Magnificent 7” (i.e., Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, Tesla). While we believe many of these companies are very strong businesses with secular tailwinds, we see more scope for positive re-rating in several of the more “boring” areas within the tech sector that are poised for cyclical rebounds.
2. Cyclical rebound in discretionary IT spend: Discretionary IT budgets (money spent on initiatives like consulting, application modernization, and refresh of tech hardware such as servers, PCs, and networking equipment) have been frozen for much of the last two years due to post-pandemic supply chain normalization, high interest rates, and uncertainty created by rapid advances in artificial intelligence (AI). We think discretionary IT budgets are set to rebound this year, benefitting vendors in areas like IT services and value-added reselling.
3. Cyclical rebound in auto/industrials: Tech suppliers to automotive and industrial companies have been going through a severe inventory correction; we see scope for a cyclical rebound as we move through 2025, which could be positive for stocks exposed to this end-market.
4. Continued growth in AI capex: As big tech continues to aggressively spend on infrastructure for AI, we have retained exposure to many of the “picks and shovels” players in the semiconductor value chain enabling this build-out.

James Slentz, CFA®, Managing Director of the Technology Group

Services Sector

“It’s difficult to make predictions, especially about the future.” – Yogi Berra

Berra’s quote feels especially fitting to the current environment. How will an unorthodox and unpredictable presidential administration impact the economy? Are we entering new trade wars, or is the threat of tariffs mostly for negotiating purposes? Will inflation tick down or reaccelerate? Will the Fed keep cutting rates, or are we in for a “higher for longer” scenario? In uncertain and volatile times, businesses have an increased desire to hedge risks related to commodity prices, interest rates, and foreign currency. Speculators also have greater opportunities for trading gains (and losses). All of this leads to greater trading volumes, benefitting companies like exchanges, brokerages, and some banks. For these businesses, uncertainty can be a good thing.

Allen Coker, CFA®, Senior Equity Analyst, Services

Consumer Goods Sector

US consumer spending exhibited a relatively high level of resilience in 2024, despite still-high interest rates and inflation negatively impacting the lower-income consumer cohorts. In 2025, it’s entirely possibly that buyers sidelined by higher rates finally make the purchase they have been waiting for. A rebound in big-ticket spending could be favorable for a number of different industries (home improvement, auto makers, lumber companies).

2025 could be the year when Chinese consumer sentiment improves and the country flips from being a headwind to a tailwind for many companies in the consumer sector. We’ve already started to see positive rates of change in some parts of the market. Nearly all luxury companies have shown a sequential acceleration in their China business in the back half of 2024. And with companies lapping easy comps for the first half of 2025, things might start looking better in China, which would be very positive from a sentiment perspective.

Make America Healthy Again? Sentiment for packaged food companies remains incredibly weak. In addition to stagnating volumes and declining pricing power, investors are grappling with the scope of Robert F. Kennedy Jr.’s mandate as well as what the ultimate impact of GLP-1s will be on the sector. If the market can wrap its head around either one of these risks, we may see a relief rally in one of the most unloved parts of the market right now. As it stands, the aforementioned fears are so pervasive that tobacco is trading like it’s safer than Food/Beverage right now.

Should Trump’s tariffs prove to be more bark than bite, it would certainly remove a risk for many companies that sell their products into the U.S. market.

Jake Boak, CFA®, Managing Director of the Consumer Group

What to Expect from Here

Each year brings its own nuances, opportunities, and hurdles. 2025 is no exception. While there’s a degree of uncertainty for what’s to come, we’re already relying on our proven and time-tested strategies to stay strategic, disciplined, and thoughtful to be ready to seize opportunities as they come our way.

CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.

This material contains the opinions of Manning & Napier Advisors, LLC, which are subject to change based on evolving market and economic conditions. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.