Market update: Fourth quarter 2025

Global markets close a turbulent year positively, despite year-end profit-taking. Every Vive investment category ended the quarter in positive territory. Emerging markets were once again the best-performing investment category.

Review of the Fourth Quarter 2025: Global Markets Show Modest but Stable Gains.

Despite a turbulent year, many stock markets ended with stable price gains. Several key stock indices even finished near record or multi-year highs. This brought an optimistic end to a year that had previously been fraught with uncertainty.

A notable development in 2025 was that stock markets outside the United States outperformed the American market for the first time in several years. This was partly because the US dollar weakened, investors took profits on large American technology companies by (partially) reducing their positions, and non-US stocks were attractively priced at the beginning of 2025. This allowed positive developments outside the US to lead to higher stock prices more quickly.

In Europe, financial companies performed particularly well, helped by lower interest rate expectations. Although the European Central Bank left the policy rate unchanged in both October and December, it revised its growth forecast for 2026 upwards: from 1.2% to 1.4%. This gave investors extra confidence that the European economy continues to recover gradually.

A positive mood emerged in global markets in the fourth quarter due to healthy corporate earnings growth, decreasing inflation, and the expectation that major central banks — led by the US central bank — will continue to have room for further interest rate cuts in 2026. Towards the end of the year, some investors took profits, but the overall sentiment remained positive.

This provided more confidence for many emerging countries, which are highly dependent on exports to developed economies such as the US. The South Korean stock market performed the best, partly thanks to a strong technology sector. The Chilean stock market benefited from rising commodity prices, as commodity exports constitute a large part of the Chilean market

Non-US Markets Outperform the US: What Does This Mean for Your Portfolio?

Although non-US equities outperformed the US in 2025, the American stock market remains by far the largest in the world. To put this into perspective, we look at the MSCI All Country World Index Investable Market Index (MSCI ACWI IMI). This is a global equity index that includes almost all listed companies: from developed and emerging countries, and from large to small businesses.

The MSCI ACWI IMI covers approximately 99% of global market capitalisation. Companies with a higher market capitalisation weigh more heavily than smaller companies. When we look at this distribution as of 31 December 2025, we see that approximately 62.8% of the global market capitalisation is in American companies. This is followed by Japan (5.5%), the United Kingdom (3.3%), and Canada (3.1%). The United States therefore remains dominant, and one year of lower performance does not immediately change that.

Our Advice: Stick to Your Strategy

At the same time, this development shows the importance of global diversification. When returns are spread across multiple regions, you are less dependent on one country or sector. This leads to a more stable portfolio and helps to manage risks better, especially in a world where market leadership can shift. With a well-diversified and stable investment strategy, you benefit from opportunities wherever they arise.

That is why our advice remains unchanged: stick to your strategy.

Stay Focused on Your Long-Term Goals

Do not get carried away by temporary market movements or emotion. Stay focused on your personal financial goals. Only adjust your portfolio if your personal situation changes and not because of the whims of the market.

A broadly diversified, systematically managed strategy, such as Vive's, offers the best basis for long-term success. Trust the process and let your strategy work for you.

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