Alternative Investments in 2025: Our Top 5 Themes to Watch
In financial markets, change is the only constant. Staying agile and informed will be key to navigating these market currents in 2025.
Here, we explore five key themes driving new opportunities.
1. Shortages in the U.S. housing market create investment opportunities
The U.S. housing market made headlines in 2024 due to ongoing shortages that contributed to a supply-demand imbalance.
With an estimated shortage of 2 million to 3 million homes, demand far outstrips supply, creating a structural opportunity for real estate investors globally.
2. The AI-driven energy bottleneck reflects unprecedented demand
The reindustrialization of U.S. manufacturing, increased electrification in clean energy solutions and the accelerating adoption of AI and digital infrastructure are driving new energy infrastructure development.
In the United States, demand growth for power is expected to increase by 5x–7x over the next three to five years, which creates opportunities for investors in power generation and distribution projects.
3. Amid normalizing interest rates and deregulation, private equity dealmaking rebounds
Historically, lower interest rates correlate with increased dealmaking (mergers, acquisitions and exits) and higher asset valuations. Transactions typically increase as financing costs decrease.
Easing regulatory constraints and the potential new corporate tax incentives expected from the new U.S. administration could further enhance earnings and encourage strategic acquisitions.
4. Poised for growth, capital investment supports innovation
Investing in growth equity and venture capital can offer a direct means of gaining exposure to the future of technology.
This year, capital allocators can benefit from lower entry-point valuations and easing competitive pressures. We believe the stage is set for growth equity and venture-backed companies to create new tools using AI, robotics and automation to drive greater efficiency.
5. Resetting interest rates may benefit private credit
Although interest rates are easing, we expect them to settle at levels higher than those seen in recent business cycles. This environment presents challenges for companies with heavy debt loads but also creates potentially compelling opportunities for private credit managers.
We’re particularly interested in potential opportunities in opportunistic and asset-backed credit, which can help diversify risks relative to corporate lending.
A new era of growth and innovation begins
By carefully gauging risks and aligning opportunities with their portfolios, investors have a chance in 2025 to participate in a new era of growth and innovation. As always, due diligence and selectivity are paramount in choosing the right investment partners and opportunities.
Rick Barragan is the Managing Director,
Los Angeles Market Manager, for J.P. Morgan Private Bank.
[email protected] | (310) 860-3658
privatebank.jpmorgan.com/los-angeles
Source: “Alternative Investments in 2025: Our Top 5 Themes to Watch”, by Jay Serpe, Global Head of Alternative Investments, Strategy & Business Development, January 15, 2025
