As at the end of each year, the DVFA Investment Professionals once again answered questions about the development of the most important asset classes in the coming year (survey period 20-27 November). According to long-term capital market expectations, equities should also perform relatively best in 2025, is their judgement. ‘Experience shows that real assets are favourable in uncertain times, so the positive expectations for the gold price are hardly surprising,’ comments Ingo Mainert, Deputy Chairman of the DVFA Executive Board, on the results. ‘Overall, however, the rather subdued assessments of our experts are a healthy reflection of two unusually good capital market years in terms of sentiment,’ Mainert summarises the 2025 outlook. In detail, the participants painted the following picture.
Interest rates on 10-year German government bonds mostly seen between 1.75 % and 2.5 % in 2025
Most participants see no major movement or only a slight increase in long-term current yields in Germany in 2025: around a quarter of respondents estimate the ‘10-year bund’ to be between 2.00 % and 2.25 % or 2.25 % and 2.50 % at the end of next year. For more than one in five participants, current yields will even rise above 2.5 %. However, more than a quarter of the participants expect them to fall below 2.00% and are therefore positive about bonds.
Where could the current yield on the 10-year German government bond be at the end of 2025?
Optimism only slightly outweighs optimism for the DAX
As the DAX only recently surpassed the 20,000 point mark, the DAX optimists slightly outweighed the optimists for 2025 during the November survey: more than 42% of survey participants see the DAX exceeding 20,000 points by the end of next year, although only 4% see it exceeding 22,000 points. In contrast, a third of the responses were rather pessimistic about the DAX, with less than 19,000 points by the end of 2025.
Which DAX do you think is likely at the end of 2025?
“Trump dollar” stronger rather than weaker
A clear two-thirds majority of 66% of respondents answered the key question about the dollar/euro exchange rate by the end of 2025 with a continued strong dollar: contrary to some earlier forecasts, they see an exchange rate of less than 1.05 dollars per euro at the end of the first calendar year of Donald Trump’s US presidency. On the contrary, only 11% expect the dollar to weaken to more than 1.10 dollars per euro. What this means for the future trade policy and current account of the USA as well as the Fed’s interest rate policy, however, remains an exciting and open question for the time being.
What dollar-euro exchange rate do you think is possible at the end of 2025?
In uncertain times: Gold still in demand
At 58%, a clear majority of DVFA Investment Professionals are of the opinion that the positive trend in the gold price will continue until the end of 2025: almost a third of survey participants (31%) see it in a range of USD 2,700 to 2,900 per troy ounce and only slightly less than a third (27%) even above USD 2,900. At 28%, gold sceptics are in the minority (price per ounce below USD 2,600).
What price of gold do you think is likely at the end of next year (in US dollars per troy ounce)?
A comparison of the relative development of asset classes in 2025: equities clearly ahead
When asked which traditional asset class is likely to perform best in relative terms by the end of 2025, equities are far and away in the lead with 57% of responses. This is followed by bonds and commodities with 13% each. In the survey for 2024 a year ago, bonds were still in second place with 32%, just behind equities (42% at the time). In view of the positive assessments of the gold price, the relatively poor performance of commodities overall is somewhat more surprising than that of property (9%) and liquidity instruments (8%).
Which traditional asset class could perform best in relative terms in 2025?
The greatest sources of uncertainty in 2025 are geo-economic
When asked about the greatest uncertainties in the coming year, up to three answers were possible. In terms of all responses, geopolitics (34%), i.e. current and future conflicts in particular, and economic risks (25%) dominated. This was clearly followed by a possible debt crisis (15%), inflation (13%) and the threat of social division in society (8%). Extreme weather events came last with 3% of responses.
When formulating the six possible answers and the seventh category “Other uncertainty factors” (only 2%), it was assumed that both very rare event risks (‘black swan’) and the uncertainties associated with the new US presidency are included as ingredients in all the uncertainties mentioned and are therefore “endogenous” to a certain extent.
“The last two years have been better than expected for capital market participants. It is therefore sensible to take a breath now and cautiously set expectations for next year sideways,” says Ingo Mainert, summing up the DVFA Investment Professionals’ Capital Market Outlook 2025, adding: “In view of the known historical returns and the probably favourable long-term prospects for equities, the at best tentative improvements in pension policy to date are all the more regrettable. We can only hope that the next German government will bring about a ‘pension turnaround’! This will probably only be possible with more private equity capital.” Mainert is thus repeating a well-known DVFA position.
