Q4 2025 PSN Top Guns - Global Markets Thrive in Q4 2025
The fourth quarter of 2025 demonstrated the resilience of global markets, with equities (MSCI World index +3.20%) and bonds (FTSE World Government index +0.11%) delivering positive returns, despite challenges such as the longest U.S. government shutdown in history and geopolitical tensions. The solid performance across asset classes was driven by accommodative monetary policies, easing inflation, and strong economic recoveries in key regions. Diversified portfolios benefited significantly, particularly from the outperformance of foreign equities and emerging markets.
The Federal Reserve cut interest rates in October and December which supported U.S. fixed income prices and resulted in the Bloomberg U.S. Aggregate index posting a +1.10% return.
The S&P 500 index rose +2.66% during the quarter, bringing its total return for 2025 to +17.88%. This marked the third consecutive year of double-digit gains for the index, a historically rare occurrence. Additionally, the broad market index hit record highs in December. The Federal Reserve implemented two rate cuts in October and December, signaling a shift toward a more accommodative monetary stance to come. The expectations for more accommodative policies supported investor’s risk appetite and boosted equity prices.
Investor enthusiasm centered on artificial intelligence and technology, which drove earnings growth and market resilience despite economic headwinds, such as rising job cuts. Large cap stocks (Russell 1000 index +2.41%) continued to outperform small cap stocks (Russell 2000 index +2.19%), extending a five-year trend of dominance by larger companies. Below are some of the strategies that make up the PSN Top Guns Large Value Universe:
Developed international markets, as measured by the MSCI EAFE Index, had a return of +4.91% for the quarter and an impressive +31.89% for the year. Emerging markets, tracked by the MSCI Emerging Markets Index, gained +4.78% in Q4 and +34.36% for the year, benefited from higher commodity prices and improved trade balances. The dollar’s decline during the quarter provided a tailwind for foreign equities, as U.S.-based investors benefited from currency translation effects. Europe (MSCI Europe index +6.26%) saw a resurgence in economic activity, driven by strong manufacturing and export growth. The following strategies made the PSN Top Guns list for the Europe Universe.
U.S. aggregate bonds (Bloomberg U.S. Aggregate index) gained +1.10% during the quarter, while global bonds (FTSE Non-USD World Government Bond index) fell -0.48%. For the year, global bonds delivered a total return of +8.47%. The Federal Reserve’s rate cuts not only supported U.S. fixed income markets but also influenced global central banks to adopt more dovish policies. Inflation pressures eased in the latter half of the year, reducing concerns about eroding fixed income returns and improving sentiment towards bonds.
Credit markets delivered strong performance, with U.S. credit spreads tightening further during the quarter. High-yield bonds outperformed government securities, with the ICE BofA US High Yield index advancing +1.35% compared to government bonds' +1.12% (Bloomberg U.S. Treasury: 7-10 Year index). Below are some of the strategies that make up the PSN Top Guns High Yield Universe:
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Q4 2025 PSN Top Guns - Global Markets Thrive in Q4 2025
The fourth quarter of 2025 demonstrated the resilience of global markets, with equities (MSCI World index +3.20%) and bonds (FTSE World Government index +0.11%) delivering positive returns, despite challenges such as the longest U.S. government shutdown in history and geopolitical tensions. The solid performance across asset classes was driven by accommodative monetary policies, easing inflation, and strong economic recoveries in key regions. Diversified portfolios benefited significantly, particularly from the outperformance of foreign equities and emerging markets.
The Federal Reserve cut interest rates in October and December which supported U.S. fixed income prices and resulted in the Bloomberg U.S. Aggregate index posting a +1.10% return.
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The S&P 500 index rose +2.66% during the quarter, bringing its total return for 2025 to +17.88%. This marked the third consecutive year of double-digit gains for the index, a historically rare occurrence. Additionally, the broad market index hit record highs in December. The Federal Reserve implemented two rate cuts in October and December, signaling a shift toward a more accommodative monetary stance to come. The expectations for more accommodative policies supported investor’s risk appetite and boosted equity prices.
Investor enthusiasm centered on artificial intelligence and technology, which drove earnings growth and market resilience despite economic headwinds, such as rising job cuts. Large cap stocks (Russell 1000 index +2.41%) continued to outperform small cap stocks (Russell 2000 index +2.19%), extending a five-year trend of dominance by larger companies. Below are some of the strategies that make up the PSN Top Guns Large Value Universe:
Developed international markets, as measured by the MSCI EAFE Index, had a return of +4.91% for the quarter and an impressive +31.89% for the year. Emerging markets, tracked by the MSCI Emerging Markets Index, gained +4.78% in Q4 and +34.36% for the year, benefited from higher commodity prices and improved trade balances. The dollar’s decline during the quarter provided a tailwind for foreign equities, as U.S.-based investors benefited from currency translation effects. Europe (MSCI Europe index +6.26%) saw a resurgence in economic activity, driven by strong manufacturing and export growth. The following strategies made the PSN Top Guns list for the Europe Universe.
U.S. aggregate bonds (Bloomberg U.S. Aggregate index) gained +1.10% during the quarter, while global bonds (FTSE Non-USD World Government Bond index) fell -0.48%. For the year, global bonds delivered a total return of +8.47%. The Federal Reserve’s rate cuts not only supported U.S. fixed income markets but also influenced global central banks to adopt more dovish policies. Inflation pressures eased in the latter half of the year, reducing concerns about eroding fixed income returns and improving sentiment towards bonds.
Credit markets delivered strong performance, with U.S. credit spreads tightening further during the quarter. High-yield bonds outperformed government securities, with the ICE BofA US High Yield index advancing +1.35% compared to government bonds' +1.12% (Bloomberg U.S. Treasury: 7-10 Year index). Below are some of the strategies that make up the PSN Top Guns High Yield Universe: