Asset Class Performance Review, 2025
The above chart shows the performance of our benchmark funds in the main asset classes for the year of 2025.
Equities
The MSCI World Equity Index (TR) in Euro was up just over 5.5% for 2025. It recovered from a YTD low (in euro terms) of c. -16.5% back in April 2025. This recovery occurred despite the weak dollar continuing to be a headwind for euro-based investors.
Having experienced a challenging first half to the year (tariffs proving a primary concern), the second half of the year has seen fears over tariffs, geopolitics and growing debt concerns give way to greater optimism about corporate profitability, economic growth, and the positive impact of Artificial Intelligence.
As we closed out 2025 markets appeared to be taking a glass half full approach to risk assets and 2025 proved to be the 3rd year in a row of this equity bull run as markets tilted towards the positives in what continues to be a relatively uncertain world.
Bonds
Government bonds finished the year broadly flat, while corporate bonds finished the year in positive territory.
Bond investors appear to continue to prefer company debt over government debt as the level of indebtedness of larger governments (US, UK, Italy and France) continues to weight on government bond markets.
The level of corporate bond issuance remains high as companies look to use debt markets to partly fund the continued heavy investment in AI. At the time of writing the spread between corporate bond yields and their government equivalents remains low versus history.
Most of our bond exposures are in Europe and the expectation is that the ECB may have made its final interest rate cut of this cycle. President Lagarde believes that the current interest rate setting is appropriately positioned for the current environment with inflation expectations appearing to be contained within the Eurozone.
Property
There was further stabilisation of capital values in commercial property markets over the year. Solid income yields of c. 5% per annum helped to produce positive performance across our main property fund managers.
Cash
The yields on our main Cash funds are currently c. 2% and are in line with the ECB deposit rate. Markets have priced in that there will be no further ECB interest cuts for the foreseeable future, which if correct would mean that cash fund returns should stabilise, albeit at relatively low levels.
Multi-Asset Funds
Balanced multi-asset fund performance was broadly in line with expectations as they recovered from a sluggish start to the year to finish in a positive position. The relatively good outcome for multi-asset funds reflected a continued recovery for equities over the 4th quarter. Their asset allocations are currently positioned with a reflectively neutral weighting to equities, and they continue to lean on their diversification assets of Cash, Bonds, Alternatives (including Gold) and Property to help to reduce overall volatility.