How to invest $500,000 for the year ahead, according to 2 wealth managers

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How to invest $500,000 for the year ahead, according to 2 wealth managers

As investors position their portfolios for 2025, wealth managers are advocating for a diversified approach with selective bets on undervalued sectors. CNBC Pro spoke to Ollie Clark, deputy head of research at WH Ireland, and Mark Preskett, senior portfolio manager at Morningstar Wealth, about how investors with roughly $500,000 could look to allocate their portfolio. Clark expects the growth in artificial intelligence to lead to another year of bumper returns. The AI trend has so far propelled the S & P 500 by nearly 25% in 2024, with AI chip stock Nvidia becoming the largest company in the world by market capitalization. “U.S. earnings projections remain elevated and will likely provide a tough hurdle to generate the same level of returns in 2025,” Clark told CNBC Pro. “Although we expect earnings to be the sole driver of returns next year, the rapid growth from AI will help to provide another year of handsome returns.” For U.K.-based investors managing a portfolio of between $500,000 and $750,000, with a five to 10-year investment horizon, Clark recommended a heavily equity-weighted allocation, with about 85% invested in stocks and 15% exposed to gold and U.K. government bonds . Investors with portfolios already geared toward a traditional 60/40 stock-bond portfolio mix can expect some, if limited, relief in the future, according to Clark. Prices for bonds, previously viewed as hedges, declined alongside stocks in 2022 as the Federal Reserve raised rates. “The 60/40 portfolio still offers the role of protection from growth shocks, but I am more skeptical about inflation shocks,” Clark noted, highlighting potential inflationary policies under the second administration of President-elect Donald Trump. “Should inflation resurge, which is very possible given Trump’s inflationary policies and the need to inflate away the vast amount of debt, then bonds would sell off as yields rise, and equities would also likely struggle,” Clark added. Morningstar Wealth’s Mark Preskett agreed that the

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for traditional 60/40 stock-bond portfolios has improved if inflation concerns remain muted. “We’re in a much better place for the 60/40 portfolio,” he said. However, “investors need to carefully consider their bond exposure given potential policy shifts under a second Trump presidency,” Preskett warned, adding that “tariffs could be inflationary for the U.S. economy, which could impact bonds.” One bright spot Preskett highlighted was the U.S. small-cap sector, which is trading at 15–20-year lows relative to large caps on a price-to-earnings basis. “Make America Great Again should benefit U.S. smaller companies, which are much more focused on the U.S. domestic economy,” said Preskett. He pointed to the SPDR Portfolio S & P 600 Small Cap ETF as one way investors can gain exposure. Preskett also highlighted opportunities outside the U.S., with South Korea offering compelling value propositions for long-term investors willing to weather near-term volatility. Korean technology companies — especially those involved in high-bandwidth memory chips crucial for AI applications such as SK Hynix and Samsung — present an attractive entry point at current valuations, according to Preskett. The Morningstar Wealth portfolio manager said investors could gain exposure to such companies through the Franklin FTSE South Korea ETF . Meanwhile, WH Ireland’s Clark said there was value to be found in commodities. “They have sold off recently in the face of growth concerns, but the sheer demand for commodities like copper for the energy transition, AI and defense is hard to match.” Copper prices have declined by 20% since May 2024 despite growing demand as a result of the energy transition toward electricity. Clark’s fund holds stakes in companies that mine copper. Regular investors can access the trend through ETFs including the iShares Copper and Metals Mining ETF . @HG.1 YTD line

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