The BEAT Quarterly Webinar 2Q 2025

On July 15 Eaton Vance held a webinar on The BEAT featuring strategists discussing opportunities in  Bonds, Equities, Alternatives and Taxes. Highlights can be found below, while the full replay can be found here. Note that the replay is eligible for 1 CE Credit for CFPs / IWI / CFAs.

Jim Caron on the Macro Environment and Fixed Income
“My top theme for the second half of 2025 is that ‘uncertainty gives way to clarity.’ In the first half of the year many investors were uncertain about global tariffs, budgets, taxes, deregulation and other policies.

But there is now more clarity surrounding these issues, at least much more so than in the first half of the year. With respect to tariffs specifically, markets understand that there is a pathway to getting agreements, with wiggle room during ongoing negotiations. That understanding should reduce some of the risk premia in markets.

On the fixed income side there has been a lot of discussion about the reduction of foreign ownership in U.S. Treasuries. Now this is actually not something new, but many still believe that U.S. Treasuries may no longer be a safe haven asset or that the U.S. dollar is losing its reserve status.

I do not think that is the case in either instance. What I think is in fact happening is that there is a global rebalancing. One of the trades I'm proposing for the second half of the year is selling U.S. Treasuries, buying international fixed income and hedging back to U.S. dollars. Remember, the U.S. dollar has been overvalued for a long period of time and it is now moving back to fair value.

Understand too that there is still a lot of demand for U.S. Treasuries, demand which can be regulated into existence. There might be a future change in regulation where U.S. banks will not be required to hold their excess reserves at the Fed. If this is the case, these banks will likely use those reserves to buy U.S. Treasuries, which could create about three and a half trillion of additional of demand. Overall, the U.S. Treasury market should not lose sponsorship, it is merely expected to shift from foreign to domestic buyers.”

Andrew Slimmon on U.S. Equities
“I've been in this business a long time and it's extraordinarily difficult to predict any kind of macro economic events. But the consistency in markets I see is often based on behavior, and we are seeing yet again another year of a consistent stock market.

The market bottomed in the fourth quarter of 2022 and since that low the behavioral patterns are consistent with previous bull market cycles. Namely that in the first year of that low, from Q422 to Q423, the market was up 22% and the second year the market was then up over 30%.

So we've had two excellent years in a row. Now unfortunately, because investors often look in the rear view mirror, many are still focused on the previous bear market. But what happens in the third year is we move into the optimism year, because people suddenly realize they better get more optimistic.

They've been underweight equities, and the stock market tends to have a lower return year in that third year. It’s often called the ‘pause year’ and it's hard to believe, but if you wind the clock back to the 4Q24, the market is only up single digits. That return is consistent with the third year. The other consistency in the third year is more volatility.

This market doesn’t just creep along bit by bit. Many days it overshoots and undershoots, ultimately leading to what we think will be a single-digit year. That's what we thought coming into the year, and certainly that's what we've seen. In my opinion it's time to increase your exposure to equities because we still think we are in the midst of a lower-return, but positive, year.”

Steve Turner on Alternative Investing
“I want to start by highlighting the separation we're seeing between intentions and actions. Sentiment indicators provided by third-party surveys show a positive trend over the last 12 to 18 months in all private asset classes (with the exception of private credit, which has come off of a high level of conviction in 2022 and 2023).

But for all the other private asset classes, we believe the enthusiasm is attributable to a combination of attractive return expectations combined with features that offer a minimization of downside risks that are widely considered to be present in private investments. However, despite the enthusiasm, what we're seeing is that capital raising is significantly below average.

Capital raising is now a slow process. What used to be 12 to 15 months has become over 20 months for the average fund to try and get to target. So how can it be true that intentions are so positive, but actions have been so muted?

In our opinion it's because of cash flows. Private markets investors have been experiencing constrained activity since 2022 when the shift in the interest rate regime triggered adjustments across capital markets. We think there's a big takeaway for investors that are not constrained, investors who have decision making that is not driven by trapped capital. We think this provides a significant opportunity to invest in less well-served assets for potentially outsized returns.”

Brian Smith on Taxes
“The July 4^th bill passed by Congress largely has favorable outcomes for individual taxpayers. Yet this bill neither negates nor eliminates the importance of tax management, tax planning and working with a tax professional. What we now have is clarity, which allows us to better align our tax strategies with fewer variables.

In my mind there are three fundamental tenets with respect to taxes. One, asset location can be as important as asset allocation. Yes, investors should be building an appropriate asset allocation at the aggregate level, but then should be deconstructing it and placing different asset classes and investments into their most tax-appropriate investment vehicle.

For example, mutual funds are inherently less tax efficient than other investment vehicles. Investments with high turnover or a lot of short-term capital gains might be best suited to be placed in tax-exempt or tax-deferred accounts. On the other hand, separately managed accounts that use systematic tax management techniques are generally better suited for taxable accounts.

Our second tax tenet is about the deferment of taxes. Deferring taxes means that more money stays in an investment portfolio, which should lead to improved compounding, provided the sources of tax friction have been identified and strategies have been used to help manage the out-of-pocket implications. In all, 1% or 2% in taxes can have a significant drag on portfolio return over the long term.

The third tenet is to recognize the tax code for what it is, namely a set of rules designed to encourage some behaviors and discourage others. We understand that the average investor will spend over a third of their lifetime earnings on taxes and for high-net-worth individuals in particular, it is important to have detailed planning discussions about asset location, philanthropy, future liquidity events, tax losses and the related harvesting opportunities.”