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Utilities have traditionally been known for their defensive properties, which makes the combination of robust economic growth, technological excitement and elevated bond yields an unlikely recipe for their strong performance. That said, the sector’s 23% gain kept pace with the broader market last year. In 2025, this momentum should continue. After two decades of stagnant power demand, the electrification of the U.S. economy and the intense power needs of generative artificial intelligence should prompt demand to inflect higher. Additionally, with our aging grid infrastructure and more frequent extreme weather events, finding enough capacity to provide adequate electricity supply won’t be easy. These themes, and others, should highlight winners across the utilities sector. For investors looking to diversify tech exposure, utilities could offer an attractive way to invest in the many themes driving markets today, but with a very different wrapper.

To share what she’s seeing across the utilities sector, Gabriela Santos, my new co-host, will be joined by Teresa Kim, a utilities-focused equity research analyst here at J.P. Morgan Asset Management.

Resources:

Subscribe to the Notes on the Week Ahead podcast for more insights from Dr. David Kelly: Apple Podcasts | Spotify

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In this episode of Alternative Realities, we explore the dynamic world of alternative investments and their increasing accessibility to a broader range of investors. As these asset classes become more mainstream, we discuss their role in diversifying portfolios and enhancing returns.

Dr. David Kelly, Chief Global Strategist at J.P. Morgan Asset Management, is joined by David Lebovitz, Managing Director and Strategist at the Multi-Asset Solutions Group, to discuss the inception and evolution of the Guide to Alternatives. They delve into the structure and importance of alternative investments, the integration of alternatives into multi-asset portfolios and the challenges of sizing these allocations.

Resources:

• For more resources on Alternatives, visit our Guide to Alternatives, Principles of Alternatives Investing, and Alternatives 2025 Outlook
• Subscribe to the Notes on the Week Ahead podcast for more insights from Dr. David Kelly: Apple Podcasts | Spotify

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Despite lagging the broader index, industrial stocks performed well in 2024, gaining over 17% on a total return basis. Sector fundamentals, however, have been more challenged. After an impressive post-COVID recovery supported double-digit earnings growth in 2022, industrial earnings have been in the doldrums alongside U.S. manufacturing activity. In fact, on a year-over-year basis, the sector is on pace to see earnings contract for the last three quarters of 2024. That said, prospects ahead look brighter. With AI and policy tailwinds, increased focus on domestic infrastructure investment and the Fed now easing policy, earnings growth is expected to accelerate in 2025, providing investors with a broad menu of investment options to choose from within the sector.

On this episode, Gabriela Santos, is joined by Rob Maloney, an equity research analyst covering industrials and a co-portfolio manager here at J.P. Morgan Asset Management.

Resources:

Subscribe to the Notes on the Week Ahead podcast for more insights from Dr. David Kelly: Apple Podcasts | Spotify