The markets this year remind me of a few old-time phrases like “Good things come to those who wait” and “Time heals all wounds”. As I’ve noted in several blog posts over the past year,
Though no one likes losses, long term investors have ALWAYS been rewarded with market returns reaching new all-time highs by ignoring volatility and holding through tough times. Though “they all seemed like the end of the world at the time”, markets have always recovered.
2025 Q2 unfolded under the shadow of geopolitical tensions and shifting policy landscapes. Investors faced a volatile quarter marked by U.S. policy uncertainty, global monetary easing, and diverging economic signals across regions.
U.S. market anxiety surged in April amid tariff hikes, deregulation efforts, and tighter immigration policies. Equity valuations dipped but remained elevated, while fixed income yields hovered near long-term averages until easing late in Q2. The S&P 500 hit an all-time high on June 30, eclipsing its previous all-time high hit on February 17.
While the U.S. showed signs of mid-to-late cycle dynamics, Europe leaned on fiscal stimulus to counteract trade headwinds. Emerging markets benefited from a weaker dollar and rising commodity prices. Consequently, the long-awaited global equity rally finally showed its hand with a strong rally beating the U.S. handily.
The chart below shows both familiar patterns and a few surprises. Once again, U.S. small- and mid-cap equities (SCHA, +8.3% and SCHM, +7.5%) delivered solid returns but lagged its large cap brethren (IVV, +10.8%). The standout this quarter? International developed and emerging market equities (SCHF, +12.5% and SCHE, +9.5%) surged! Fixed income was up and down but ended on a strong note with low single-digit returns.
As I am wont to say,
In a world that often feels unstable, D&A remains committed to building portfolios that can weather the storm. Our globally diversified approach, combined with strategic risk management and a focus on long-term goals, is designed to keep clients on track, no matter what challenges the world throws their way.