Global equities had another stellar year, returning 14% across 2025 in GBP terms as measured by the MSCI ACWI index. Given where we were after Trump’s ‘Liberation Day’ in April this is quite the result. The story of where these returns came from was however rather different compared to previous years.
The S&P 500 was, for the first time in a long time (20 years to be exact), the weakest performing equity region. However in USD terms it still returned 18% over the year. Within the US there was also some variance in where these returns came from, with only 2 of the Magnificent 7 stocks outperforming the index (Nvidia and Alphabet).
Emerging Markets and Asia were the best performing regions, increasing by over 30% in dollar terms, with Korean equities more than doubling over the year. Japanese, UK and European equity markets also posted returns in excess of 20% over the year in their local currencies.
If you have got this far and wondered how global equities returned ‘only’ 14% when the worst performing region returned 18% over the year, you would be right to point out this seems odd. The reason is all down to currency and we wrote about the impact of currency movement in our Q2 commentary. What we wrote then remains true now and the loss of value of the dollar since ‘Liberation Day’ has dampened returns for GBP investors.
We rarely talk about alternative investments but precious metals had a very strong year, in particular gold and silver. ‘Digital gold’ as some of it’s proponents call it (Bitcoin) did not in fact perform like the real thing and lost value over the year. The problem with all of these types of asset classes is they are close to impossible to value, given they do not produce income and are all speculative in nature.
It was a good year for fixed income and particularly UK gilts, as interest rates were cut by the Bank of England by a total of 1% over the year despite inflation remaining above target. This has also led to market leading mortgage rates falling below 4% which is good news for those coming off very low fixes taken out during covid, who had potentially been looking at rates in excess of 5% not too long ago.
As we head into 2026 the world continues to look volatile. At the time of writing the US president has already forcibly captured one country’s leader, threatened to do the same to at least one other and openly threated the annexation of Greenland. The Ukraine war continues, tensions remain high in the Middle East and inflation is still not fully under control. While we at Altor cannot tell you what 2026 will bring (and neither can anyone else despite what they may claim), we can make sure that you have a proper financial plan and portfolio that has been stress-tested over all sorts of scenarios from the past 110 years, so you can spend your time on the things that really matter.
Our advisers are building financial plans for clients from our offices in Hook, Hampshire and throughout the UK.