Where Is Smart Money Investing in 2025?

Episode Transcript:  

   In a world where tariffs are basically roiling trades, and AI is reshaping nearly every sector. Where is the smart money parking their capital in 2025? We're gonna unpack this from private credit's, $1.6 trillion boom, to a sub $300 billion tokenized real estate market that smart money is leaning into.

Let's get ready to scale.

Hey guys, my name is Jeanette Friedrich. I'm the director of Investor Relations here at Blue Lake Capital, where we specialize in multi-family investments across the us but it's always really helpful to understand how the market is operating overall. And so we're going to look at where are people parking their capital in 2025.

Now, before we get into that, let's just have a quick backdrop with basically the macro factors that are impacting a lot of how the economy is performing right now. And what I mean by that basically is the Fed policy yields and inflation. So as you well know, the Fed has basically been holding its policy rate study at between four point a quarter to four and a half percent, forcing all of us into a very patient wait and see strategy whether we like it or not.

But that's where we're at with it. In the meantime, yields from the 10 year treasury are also hovering right around 4.4%. If we're gonna be really precise, it's 4.43% as of today, Friday, May 30th, 2025. And inflation has actually interestingly showed some promising moves. April's CP PCE inflation came in at 2.5%, which is actually the softest that we've seen it since 2021.

Giving a lot of people, investors, in particularly some optimism. So keeping that in context, let's see where people are parking their capital in 2025. So coming in hot and heavy at number one is actually private credit and direct lending because of the volatility that we've been having in the markets.

This is. Only gotten even more popular than it was last year. The current a now in private credit and direct lending has surged to $1.6 trillion up from $1.2 trillion this same time last year. Now, why it matters is because a lot of times this type of lending is structured as a floating rate debt, and because interest rates are higher.

This basically puts those that are in this lending position into a more favorable position because as rates remain higher, they're able to reprice fixed rate loans a little bit higher. Also, keeping them away from getting locked into fixed rate loans that might make them lose out on some of the gains they could potentially have as we continue to have interest rates at an elevated level.

So that is why it has become very popular with people. Now next up is of course my favorite, which is multifamily and core plus real estate. So Zillow has forecasted that we're gonna see 2.1% rent growth in 2025. And so far we're actually on track. So in January, national asking rents were up 0.8%, which doesn't sound huge but 0.8% year over year was important because it was the first time in over a year that we finally saw an.

Increase after six straight months of decline. Now, fast forward a little bit more, and we're in April, and the pace ticked up 2.9% year over year with the average asking rent at $1,736. And now at this point in May. We can safely say that we are at least at a 1% mark of seeing rent growth in the US and that's only going to improve as the year continues on because there was so much new supply that came into the market that it was forcing a lot of concessions and reduced rents on properties.

But interestingly enough, occupancy actually still hovered right around 94%. Nationally showing that the demand for a multifamily is so strong, even with a ton of new supply in the markets. And yes, a little bit of rent growth was lost during that time, but it has recovered very quickly and supply is only going to diminish further into the year.

And there's very few new licenses that have been pulled, or permits that have been pulled for new development. So it's only up from here the rest of 2025 and 2026 and onward. Is looking very promising for the multifamily sector, which is very welcomed after a few rough years. Now coming in, number three is venture capital and growth equity.

So basically there's been a lot of momentum in Q1, which has been interesting to see. Basically, VCs have poured $91.5 billion into US startups in Q1 2025, which is a 30% jump from the quarter before that. And more interestingly, about 71% of these investments are actually targeted towards AI focused companies.

And meanwhile, another new frontier is also emerging at the intersection of FinTech and real assets, which is tokenization and digital assets. So this is becoming a interestingly, more popular, I still haven't delved into it personally, but the tokenized real estate market is actually at $300 billion as of right now.

And Deloitte is forecasting that it could actually swell up to. $4 trillion by 2035, which would be a very impressive 20% CAGR. So we'll see if that happens. And the other thing that's been interesting to see too is that sustainability isn't just an ESG trend. It's actually important to a lot of investors.

And so sustainable and impact investing is still coming in very strong. At number five, the current global assets under management and Q1 2025. Is at $3.16 trillion. And that's very impressive because during Q1 when there was a lot of global tensions, for reasons that we won't discuss, investors pulled $8.6 billion out of the market in Q1.

So the fact that it's still holding at 3.6 trillion or $3.16 trillion says a lot. Now. Last but not least, I always like to pay attention to where family offices are allocating their funds because we're backed by a family office and we partner with some family offices as well as individuals. And so family offices, interestingly enough, in 2025 are basically dividing their portfolios.

About 54% are going to alternatives, and about 40, 46% are still going to traditional assets. So if we look at a quick asset allocation breakdown of that, about 40% is still going towards core investments like private credit and core real estate. About 30% is going towards growth, which is essentially AI enabled VC and growth equity.

About 20% is going towards alternatives, like tokenized real estate plus impact strategies. And last but not least, most of them are keeping at least 10% liquid in either the form of cash or short duration treasuries. So smart money this year isn't chasing the next hottest IPO. It's basically blending high quality income plus selective growth.

Plus purposeful impact. So if you'd like to keep up with these trends and more, be sure to subscribe to our weekly newsletter@bluelakecapital.com and let me know where are you parking your capital in 2025. Hope you guys found this helpful, and I'll see you on the next episode. Ready to Scale is brought to you by Blue Lake Capital, where we hunt down the best multifamily investment opportunities that we can find and invite investors to join in with us.

We target Class B value add multifamily properties across the Sunbelt. Our CEO Ellie Perlman invest a substantial amount of capital into every deal. This means our interests are aligned with yours. If you're an accredited investor looking to expand your portfolio and diversify sponsors, be sure to visit us@bluelakecapital.com.

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