Stock Market Outlook: March 2025

Term of the month: Private credit

On Feb. 27, State Street Global Advisors launched the SPDR SSGA Apollo IG Public & Private Credit ETF (PRIV). It’s among the first exchange-traded funds to give retail investors access to the fast-growing asset class known as private credit.

What is private credit?

Khang Nguyen, the chief credit officer of registered investment advisor Heron Finance, broke down private credit in simple terms in an email interview.

“Private credit primarily refers to non-publicly traded, privately negotiated loans between a borrower and a non-bank lender,” Nguyen said.

Non-bank lenders, also known as “shadow banks,” include hedge funds, mortgage lenders, and other financial institutions that are not bound by banking regulations.

Bonds, by contrast, are publicly-traded loans from a bank. According to Nguyen, post-Great Recession financial regulations have limited banks’ ability to lend, especially to private equity-backed companies that may not have all the paperwork needed to borrow money from banks at competitive interest rates.

That “regulatory workaround” appeal — along with the strong performance of private credit investments — has helped private credit grow rapidly. The industry had about $2 trillion in assets under management in December 2023, according to a report by McKinsey^[0]

ETFs and robo-advisors: Private credit for retail investors

Until recently, private credit was… private. The loans (which function much like bonds, providing interest payments and potential capital gains to investors) were unavailable to anyone except the financial institutions that made them, and very wealthy individuals.

But in recent years, several private credit ETFs, including State Street’s PRIV ETF, the Virtus Private Credit Strategy ETF (VPC) and the BondBloxx Private Credit CLO ETF (PCMM) have launched, opening up private credit to anyone with a brokerage account.

Some robo-advisor firms, such as Titan and Fidelity Go, have also launched private credit-based investment strategies (though Fidelity’s is only open to accredited investors). But before you invest in this novel asset class, it’s worth understanding its unique pros and cons.

Should you invest in private credit?

High and stable returns are one of the upsides of private credit. The asset class averages returns of 9% to 11% per year, Nguyen says, which is significantly higher than what you’d earn with many bond funds.

However, there are some significant downsides to keep in mind. Nguyen said that some private credit investments are illiquid — you aren’t necessarily allowed to pull your money out whenever you want, like you can with most conventional investments.

Titan’s private credit strategy, for example, only allows quarterly withdrawals, and also has a $2,500 minimum.

Private credit ETFs such as PRIV do offer daily liquidity, like most other ETFs. But regulators say that might not be a good thing, given that their underlying private credit investments can’t be bought and sold on demand like stocks.

If a large number of investors sold shares of the ETF, for example, and the ETF was unable to sell a corresponding amount of its private credit investments, that could cause the price of the ETF to diverge sharply from the actual value of its holdings. Hours after PRIV started trading, the SEC sent State Street a letter expressing “concerns regarding the Fund’s liquidity risk management program,” according to a report by Bloomberg.

Nguyen added that the private credit industry is “relatively young and filled with many inexperienced managers, and has not experienced a systemic correction or significant downturn since its inception.” Given that private credit is less regulated than conventional fixed-income investments, such as bonds, it’s hard to predict how bad a downturn might be.

The bottom line on private credit

Private credit is growing fast — and offering investors much higher returns than many bonds pay — because it fills a demand for quick-and-easy financing from companies that aren’t established enough to borrow money conventionally.

But it’s very new to retail investors, and doesn’t always offer features that most conventional investments do, like on-demand withdrawals. Plus, that lack of regulation could also leave it vulnerable to a big crash in the future.

If this sounds too risky to you, traditional bonds may be a better way to diversify your portfolio.

» See our list of the best online brokers for bonds.

Should you rebalance quarterly or annually?

The end of the first quarter is coming — and so is spring cleaning. Should you clean up your investments while you clean up your home?

Many people rebalance their portfolios annually, at the end of the year. But is quarterly rebalancing worth considering? And if you didn’t rebalance in December or January, is now a good time? We looked into the literature and asked an expert.

Quarterly vs. annual rebalancing: Which one is better?

A 2022 Vanguard study of rebalancing strategies found that when it comes to frequency, less is more — most investors are better off sticking with annual rebalancing rather than quarterly^[0]

“From an ease-of-implementation perspective, annual rebalancing is a reasonable recommendation. It also results in lower transaction costs,” the study authors wrote. (Mutual fund fees sometimes include “sales loads” that are incurred when an investor buys or sells shares of the fund.)

In addition to transaction costs, investors using taxable brokerage accounts also have to be mindful of the tax costs of selling investments, according to Kashif Ahmed, a Massachusetts-based certified financial planner.

“Too frequent rebalancing in a non-IRA account will lead to potential capital gains, and that will lead to tax obligations,” Ahmed said in an email interview.

Missed end-of-year rebalancing? Try March

Many people rebalance their portfolios at the end of the year — but with all the bustle of the holiday season, that’s an easy to-do list item to forget.

If you didn’t get a chance to do your annual rebalance in December or January, there’s a case for doing it in late March or April instead.

By then, most companies will have reported their full-year 2024 earnings per share, and first-quarter dividend payments will be out, giving you a sense of how your stocks are doing so far in 2025.

On top of that, many investors get an extra-clear snapshot of their financial situation in the early spring anyway, as they gather and review documents to get ready for tax day.

Tax-loss harvesting? The rules are different

The authors of that Vanguard study noted that there’s an exception to their annual-rebalancing-is-best finding. It doesn’t necessarily apply to investors who are selling unprofitable investments at a loss to cancel out capital gains taxes from sales of profitable investments — a strategy known as tax-loss harvesting.

“Harvesting tax losses can reduce one’s tax liabilities. This advantage is expected to make up for the slightly higher transaction costs from frequent rebalancing. Thus, our findings would not be applicable when tax-loss harvesting is being implemented,” the study authors wrote.

Quarterly rebalancing may make more sense if you’re tax-loss harvesting — but it’s worth noting that’s only possible in a taxable brokerage account. If you’re investing in a retirement account like an IRA or 401(k), research suggests annual rebalancing is generally the way to go.

» Check out the best IRA accounts.

Dates that could move markets this month

Economic events

• Friday, Mar. 7: Bureau of Labor Statistics monthly employment report. A report showing hiring levels and various measures of the unemployment rate.

• Wednesday, Mar. 12: BLS consumer price index (CPI) report. A key inflation gauge. The employment and CPI reports could give investors hints about what the Federal Reserve will do with interest rates in future meetings; unexpectedly high unemployment or low inflation could indicate that rate cuts are on the way.

• Wednesday, Mar. 19: Federal Reserve interest rate decision. The Fed will conclude its meeting and announce the new level of the federal funds rate. It is expected to keep the rate unchanged, but it may announce a 0.25% cut. The Fed will also release a summary of economic projections showing its estimates of future interest rates.

• Friday, Mar. 29: Michigan consumer survey data for March. The University of Michigan will release its preliminary data for this month’s survey on Mar. 15, and its final data on Mar. 29. The survey has become a closely watched indicator of ordinary Americans’ perceptions of the economy.

Earnings

Below is a table of blue-chip stocks that are reporting earnings in March, with the expected dates and average analyst estimates for their upcoming earnings reports.

We've filtered the list for companies with a market capitalization of at least $100 billion. These are high-volume stocks whose earnings reports are often major trading events for options traders and day traders.

No data above? Log in or register for a NerdWallet account to see the full earnings calendar.

Source: Nasdaq.com. Data is current as of Mar. 3, 2025, and intended for informational purposes only.

» See our picks of the best day trading platforms.

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