This week's chart of the week comes from Morningstar's 2025 Outlook Report. The report designed to help you succeed by bringing together the research and insights from analysts and investors across Morningstar to help you make better investment decisions in the year ahead.

The report brings together the work of over 400 researchers covering six sections that address a key challenge or opportunity faced by investors in 2025. The first section looks at where to find the best investment opportunities on a global level when the US looks expensive. 

In 2024, US stocks once again outpaced the rest of the world, rising over 25%, fueled by the strong performance of stocks that benefit from the AI boom and the prospect of lower interest rates. Yet, after the rally, valuations for US stocks appear expensive based on our stock-level valuation models and top-down expected return estimates.

As we look for opportunities heading into 2025, our focus naturally shifts to regions outside the United States, where we believe investors may achieve better risk-adjusted returns.

Expected returns from markets

Exhibit 1 shows our expected returns for various markets. Our asset-class valuation models point to lowsingle-digit returns in the US, while we expect some of the most attractive opportunities to deliver double-digit returns over the next decade.

The report also explores: 

How to build a portfolio to reach your goals: Investing is fundamentally an exchange of spending power today for the attainment of a goal in the future. Building a portfolio to meet these goals requires a long-term perspective, a commitment to deep research, and a willingness to think (and act) independently. We share some thoughts on how to build a successful portfolio that meets these future needs.

Finding returns in a falling rate environment: As many central banks have started to cut interest rates, cash deposits look less attractive. We look at the alternative options.

The pros and cons of investing in private assets: Private assets have risen to prominence over the past few years as more fast-growing companies are staying in private hands and others are seeking loans from nontraditional sources. We highlight the opportunities and challenges of investing in these popular assets.

The impact of AI on investing in 2025: As artificial intelligence continues to dominate the minds of investors, the opportunities are shifting. We look at where the best investments reside as we enter the new year.

How to build a portfolio that looks after you: Many investors, especially those who have retired, need a portfolio that meets their immediate income needs. This requires a different approach to that used when saving for the future. We identify the key challenges that income-focused investors face and how they can be overcome.

To access the above analysis from Morningstar's top minds, you can access the 2025 Outlook report through Morningstar Investor. Morningstar Investor requires a subscription, or a free, four week trial (terms and conditions at link provided).

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