Schroders global investment commentary states that while there are good reasons to support the strong performance of the US stock market, investors still need to adopt a more balanced and diversified investment strategy to flexibly address the environment of higher-for-longer interest rates and inflation. Integrating European stocks, exploring opportunities in US non-large cap stocks, and diversifying sources of income are all key steps in building a diversified and resilient investment portfolio. By expanding the scope of investments, investors can better capture potential excess returns and establish stable sources of income in a constantly changing market environment. The impressive upward trend of the S&P 500 index in the past two years is one of the strongest performances since 1928. Strong corporate profit growth has been driving this momentum, but investors are also questioning whether this trend can continue. For active investors seeking income and capital growth, the US is clearly not the only focus in the current investment landscape. For the US stock market to continue its strong performance, local corporate profit growth rates may need to exceed expectations by more than 10%, with expectations even higher for large tech companies, around twice the overall market. However, the complexity of the current environment has increased due to significant uncertainty surrounding government policies and their potential impact on inflation and interest rates. As the S&P 500 index becomes increasingly expensive, the investment market environment is changing. Different innovators, including DeepSeek, may introduce more efficient technology models, raising doubts about whether the US can continue to maintain a lasting advantage in industries such as artificial intelligence (AI). This suggests that it may be time to broaden focus and investment scope, not just focusing on US large-cap stocks, but better capturing growth opportunities from global themes. Facing Europe Europe is often overlooked, but its attractive market valuations are expected to provide significant investment opportunities. The current market sentiment is largely negative, but this pessimism may pave the way for astonishing market outperformance in the future. Despite political uncertainties, the investment market has largely digested most news. Europe has huge potential for economic recovery, especially if Germany relaxes its fiscal policy. Upcoming elections may trigger changes in fiscal policy and be accompanied by continued rate cuts by the European Central Bank. Ultimately, whether the European market outperforms expectations or moves in sync with the US market, its risk-return characteristics are quite attractive. Embracing these new opportunities can better prepare investors for various challenges that the investment market may bring. Exploring new opportunities The above observations bring a key point: the value of shifting from an overemphasis on US large-cap stocks to diversified investments. All sectors of the financial market can provide rich investment opportunities. Seeing the exciting potential of other sectors in the US market, such as finance, energy, and small-cap stocks, especially with the Trump administration's emphasis on easing corporate regulations and tax cuts, provides valuable support for companies in different sectors. The high uncertainty of US government policies and their chain reactions on inflation and interest rates indicate that focusing on building stable sources of income by 2025 will be more important than ever before. Diversifying income sources through diversified investments To further enhance the diversification of investment portfolios and diversify investments, investors should consider allocating funds to alternative income sources beyond traditional credit and equities. Here are two asset classes worth considering: Securitized credit: In an environment of rising interest rates, this asset class has historically outperformed other fixed income assets. It is related to various economic drivers, such as consumer behavior and the real estate market, and typically has low correlation with traditional corporate credit, making it a strong and powerful diversification tool. Insurance-linked securities (ILS): ILS can provide attractive risk-adjusted returns and have low correlation with traditional asset classes such as stocks and bonds. These securities aim to transfer insurance risk related to large natural disasters, opening up unique investment opportunities.