As interest rates continue to decline, savvy investors are seeking opportunities to capitalize on this trend. Investment expert Woodard has shared three compelling investment ideas that can help investors navigate this changing financial landscape and maximize returns.
The first investment opportunity highlighted by Woodard is in small-cap value stocks. These stocks are highly sensitive to interest rate fluctuations, making them an excellent choice during periods of falling rates. Woodard emphasizes that many investors already have substantial holdings in large-cap growth stocks. Therefore, diversifying into small, undervalued stocks can be a strategic move. He notes that smaller companies are significant beneficiaries of the Federal Reserve’s cutting cycle since approximately 45% of their debts are composed of short-term instruments that can be refinanced at lower interest rates.
The second recommendation is to consider emerging market debt. Woodard points out that returns on emerging market debt have historically outperformed emerging market stocks, dating back to 1997. This trend is likely to continue as lower interest rates create favorable conditions for these investments.
Lastly, Woodard suggests investing in gold miners. With the recent surge in gold demand, these companies are well-positioned to deliver robust dividends. While gold mining stocks have faced boom and bust cycles in the past, current trends indicate greater capital discipline among miners. This shift allows them to generate substantial free cash flow, enabling continued returns to shareholders through dividends and share repurchases.
To tap into these investment strategies, Woodard recommends three specific ETFs:
iShares US Small Cap Value Factor ETF (SVAL) - For exposure to small-cap value stocks. BondBloxx JP Morgan USD Emerging Markets 1-10 Year Bond ETF (XEMD) - For investing in emerging market debt. VanEck Gold Miners ETF (GDX) - For gaining access to gold mining stocks.Investment strategist McMillan advocates for a different approach, suggesting investors consider the debasement trade. He recommends allocating half of your investment into gold and the other half into bitcoin. Both assets have seen significant appreciation in 2025 as investors seek to hedge against a declining US dollar and increasing global sovereign debt. Despite recent fluctuations, McMillan believes that the upward trend has further potential for growth as central banks accumulate both gold and bitcoin.
On the contrary, Kelly suggests that investors look beyond gold and bitcoin. He believes that European and UK stocks present a more attractive investment opportunity. These stocks are generally cheaper than their US counterparts and offer more substantial dividends. With price-to-earnings (P/E) ratios in the mid-teens compared to the low 20s for US equities, investing in these international markets could yield additional returns if the US dollar continues to decline.
To capitalize on this strategy, Kelly recommends splitting a $10,000 investment in half, with two examples of funds that provide exposure to European and UK stocks being the iShares MSCI United Kingdom ETF (EWU) and the Vanguard FTSE Europe ETF (VGK).
If you’re looking to invest in the AI sector, Hsu believes that we are in the early stages of an AI boom. He suggests allocating funds toward Chinese AI stocks, with a focus on Alibaba and Xiaomi, alongside investments in US companies like Super Micro (SMCI) and Microsoft. Hsu notes that the Chinese tech firms are trading at significantly lower valuations compared to US companies, yet they are rapidly developing competitive products.
Lefkowitz adds to the conversation about AI investments, highlighting the importance of companies involved in the infrastructure build-out related to AI technology, including semiconductors and industrial services. He also suggests that healthcare offers diversification opportunities, as it has lagged behind other sectors but may soon stabilize.
DeSpirito recommends focusing on undervalued stocks during this investment climate. His strategy involves investing in companies at the trough of their earnings cycle, where both earnings growth and multiple expansion are possible. He identifies health maintenance organization (HMO) stocks, like Elevance Health, and companies involved in housing turnover, such as plumbing firms like Fortune Brands, as attractive options.
Finally, he points out that foreign companies, like BP and Shell, are trading at significant discounts compared to their US counterparts, making them potential investment opportunities for those willing to look beyond US markets.
In conclusion, whether you choose to invest in small-cap value stocks, emerging market debt, gold miners, or international equities, diversifying your portfolio can help mitigate risks and capitalize on the current economic environment marked by falling interest rates.
