Asset Class Performance, January to July 2025
The above chart shows the performance of our benchmark funds in the main asset classes, year to date to 31/07/2025.
Equities
Although the MSCI World Equity Index barely changed in euro terms, this masks a volatile period for equities. In local currency terms, the MSCI World is up nearly 10% year to date. However, the very weak dollar has depressed returns for euro-based investors.
Having started the year on a relatively solid footing, equities lost their momentum from mid-February due to the concern that tariffs would cause a double whammy of slowing economic growth and stoking inflation. This caused US equities to fall by almost 20% at the low point. These falls began to reverse from 09 April on the announcement of a 3 month pause in tariffs. Company earnings remained resilient and the expectation of increased infrastructure and defence spending added to market confidence. AI continued to be a tailwind for tech companies in the US equity markets.
Bonds
ECB interest rate cuts provided a tailwind for European bond markets. Corporate Bonds performed well over the first half of the year. However, news that Germany was planning to spend €1 trillion over the next decade on defence and infrastructure caused government bond returns to be more subdued.
Property
There was further stabilisation of capital values in commercial property markets over the period. Solid income yields of c. 5% per annum helped to produce positive performance across our main property fund managers.
Cash
The yields on Cash funds reduced to c. 2% per annum in line with cuts in ECB interest rates. Markets have priced in a c. 50% chance of one more 0.25% rate cut this year.
Multi-Asset Funds
Balanced multi asset fund performance was modest over the period @ c. 1%. This reflects the limited returns available from Bonds and Equities over the first half of 2025. Their asset allocations are currently positioned to the more conservative end of their ranges as they continue to lean on their diversification assets of Cash, Bonds, Alternatives and Property to help to reduce overall volatility.