Recent market shifts, driven by the re-emergence of trade wars, escalating geopolitical tensions, and other macro events, have made investment visibility even murkier than usual for 2025. In fact, uncertainty and volatility are inevitable, regardless of market conditions. Sheedsa Ali, portfolio manager and head of quantitative equity at PineBridge Investments, explains how a quantitative strategy can help investors build a diversified and risk-controlled portfolio to navigate market shifts.

Managed by Ali’s team, PineBridge US Large Cap Research Enhanced Fund, a quantitative investment strategy, won The Edge Singapore’s Best Funds Award under the CPF Funds category for two consecutive years1. Ali attributes its success to the firm’s active and systematic investment process, which combines macro inputs, fundamental analysis and risk control.

“What sets us apart is our proprietary Lifecycle Categorization Research framework. At PineBridge, we believe companies should be analysed in the context of their lifecycle rather than by sector or style,” she says.

This framework, consistently implemented since the 1990s, assesses and values companies based on comparisons to peers within their maturity and developmental stage. 

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“It gives us a more accurate reading of a company’s relative potential, which might be missed by investors using the standard forms of categorisation. Toyota and Tesla2 are a good example: two very different companies, but both car companies, both consumer discretionary stocks.”

Ali adds: “We seek to capture alpha opportunities by identifying the dynamic evolution of industries and companies, which tends to occur over their longer-term lifecycle and is often missed by the market, due to its focus on the shorter term.”

In addition, the team’s quantitative model, which incorporates over 200 investment factors, drills down to the very bottom of each stock’s fundamentals and trading opportunities. This model systematically ranks stocks within their lifecycle category based on their relative attractiveness across three dimensions: quality, sentiment, and valuation. Quality measures the stock’s financial strength, profitability, and balance sheet stability; sentiment captures market perception, earnings momentum, and analyst revisions; and valuation identifies attractively priced stocks relative to their fundamentals.

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AI in stock selection

Beyond traditional financial models, PineBridge has been at the forefront of using AI and natural language processing (NLP) to enhance investment research. By analysing thousands of earnings call transcripts, its AI-powered models can detect predictive tonal shifts and thematic patterns, providing an information advantage that traditional analysis might miss.

NLP techniques can also help identify subtle changes in management confidence, industry trends, and investor sentiment. Integrating these insights with traditional financial data can potentially enhance the ability to spot early warning signs or emerging opportunities that could impact stock performance.

“This commitment to innovation positions our fund to identify market inefficiencies and generate differentiated insights that can translate into sustainable performance advantages,” Ali notes. 

Positioning for 2025

Over the first few months of 2025, investors have faced a highly uncertain landscape — the Trump’s administration’s economic agenda blends populist-driven spending with supply-side tax incentives, creating a mix of reflationary and disinflationary forces. How these policies are implemented and balanced will have significant implications for markets.

“One of the most immediate areas of focus is trade policy,” says Ali. “Protectionist measures could reignite inflation just as the Federal Reserve moves toward easing interest rates, sending mixed signals to investors.” 

At the same time, the administration’s aggressive push for fiscal austerity through the Elon Musk-led DOGE initiative has replaced previous fears of unchecked government spending with new concerns over consumer and business uncertainty.

Recent economic data suggest a mixed picture3. The US services sector, which had been resilient post-pandemic, is showing signs of slowing. Meanwhile, manufacturing activity has rebounded, but this recovery could be temporary, given that import surges ahead of potential tariffs have distorted demand. 

Another major risk is the continued concentration of market performance in a small group of mega-cap technology stocks. While these companies have driven index gains, their outsized influence means that any downturn in the sector could lead to significant market volatility. Despite last year’s record levels of concentration, market breadth remains narrow, heightening concerns about the sustainability of current valuations.

 

Despite shorter-term concerns, the emergence of AI as a transformative general-purpose technology promises to accelerate the productivity trajectory. While American firms maintain leadership positions, improving accessibility and economics will fuel global implementation. Current market volatility may present attractive entry points for investors seeking exposure to companies driving or benefiting from this productivity acceleration.

Navigating the risks in 2025

While staying positive for the long term, the team has applied three quantitative tactics to manage near-term risks. 

First, they maintain diversification across factors rather than relying on single-factor exposures, so that the portfolio will not be overly concentrated in certain sectors or styles. 

Second, the team has implemented a factor strategy that enhances quality exposures with selective cyclical positions, providing insulation against policy missteps while preserving upside participation if growth remains resilient.

And third, the team has expanded its scenario analysis to incorporate various potential policy outcomes.

“We anticipate that if the current policy uncertainty crests in the first half of this year, as we expect, it will give way to a bigger role for the private sector in the US and potentially a spark in the eurozone, which has been stuck in a post-Covid malaise,” Ali says. “The democratisation of AI, combined with rising productivity and return on invested capital, creates a backdrop for growth against slowly normalising inflation and rates.”

Amid the uncertainty, a systematic approach that focuses on data can provide a dose of rationality. Ali notes: “In today’s complex environment, a quantitative strategy can be invaluable for cutting through the noise.” 

 

 1. Source: The Edge, Morningstar, the 2025 and 2024 awards were announced in April 2025 and April 2024 respectively. The awards recognize and honor the outstanding achievements of fund managers who have demonstrated exceptional expertise, strategic acumen, and remarkable performance based on performance, sustainability and sentiments during the entire year of 2025 and 2024. PineBridge did not pay compensation directly or indirectly to be considered for the award, to obtain the award, or to use the award.

 2. Any references to specific securities are for illustrative purposes and are not to be considered recommendations or a representation of all of the securities purchased, sold or recommended for the portfolio. It should not be assumed that investments in any security was or will be profitable. There can be no assurance that any of the above allocations or holdings will remain in the strategy at the time this information is presented. Diversification does not ensure against loss in any market. Past performance is not indicative of future results.

3. Source: S&P, Philadelphia Manufacturing Survey, as of February 2025.

 

For further information and the full disclosure, please access https://www.pinebridge.com/en-sg/intermediary-and-individual/funds/pinebridge-us-large-cap-research-enhanced-fund/a5cp.