Advisors Go Risk-On Heading Into 2H

Advisors are feeling frisky heading into the back half of 2025. 

The vast majority of financial advisors — along with some prominent analysts — are calling for a significant market runup in the remaining two quarters of the year. More than two-thirds of advisors said they expect the S&P 500 to advance 10% or more by year-end compared with May lows, according to an InspereX survey of 829 financial advisors released last week. While a quarter of those advisors expected the index to finish flat, just 8% are expecting a pullback. FactSet analysts are now projecting S&P 500 companies will grow earnings by 9% this year, and while that is significantly lower than the 15% projected back in January, it will probably be enough to ward off a bear market, said Michael Arone, chief investment strategist at State Street Global Advisors. 

“The uncertainty that roiled markets complicates decision-making,” Arone told Advisor Upside. “But the increased volatility in the first half of the year has created an opportunity for investors to make adjustments to better position portfolios.”

You’re Saying There’s a Chance?

Sure, tariffs wreaked havoc in the first quarter, but the Trump administration’s pivot has been a boon for the market since, and helped the sky-high valuations of mega-cap tech companies come back to reality. Another plus could be the Fed resuming its rate-cutting cycle later this summer, Arone said. “After a challenging first quarter for stock market performance, valuations are in a much better place,” he said. “Investors are in the uncomfortable position of waiting and seeing across multiple dimensions over the next few quarters.”

Then, there’s the fun fact that Barack Obama, Trump 1.0, and Joe Biden also suffered early volatility in their first 100 days in office, ahead of significant rallies. Historically, the first year of the presidential cycle is the strongest, Arone said. “All of this supports financial advisors’ belief that the S&P 500 will be up by 10% at the end of the year,” he said. The InspereX survey found advisors may be leaning toward risk-on investments:

• Nearly half (49%) of advisors said equities will be the best performers of 2025, followed by gold in a distant second place, then cryptocurrencies. 
• The most volatile assets through yearend are expected to be  equities (44%) and, of course, crypto (36%).  

Don’t Chase AI. For advisors looking to reinforce portfolios, Arone suggested high-quality companies with stable earnings, balance sheets and dividends. They may also want to revisit portfolio allocations to international and emerging markets stocks — especially if they haven’t owned them in a while. 

But, while the tried-and-true AI companies were all the rage in recent quarters, their massive technology investments probably won’t benefit clients that invest in them today. “Look towards tech companies that will benefit from AI capex spending at better valuations,” he said.