The current market mood is of cautious optimism, with the global investment landscape reflecting a complex interplay of geopolitical tensions, monetary policy shifts, and evolving market dynamics. Global markets have steadied somewhat after the severe volatility that the US President’s ‘Liberation Day’ sparked in April.
Both here and in the US inflation is slowing overall, which has caused analysts to have more confidence in the Bank of England and Federal Reserve to cut interest rates. This will be better news for markets and the consumer as we transition from the turbulence of the post Covid recovery years of high inflation and interest rates, into a more stable and selective rate cut environment.
Reflecting on 2025 so far… across the pond the S&P 500 is down just over 6%, after last year delivering its second consecutive year of over 20% growth, with an impressive 2024 return exceeding 26%. This level of performance has not been seen since the late 1990s. Remarkably, nearly 75% of these gains came from the top seven tech-focused stocks, now famously dubbed the “Magnificent 7”. The debate continues over whether these stocks are in bubble territory. However, their dominance reflects how integral big tech has become to daily life, particularly with Artificial Intelligence (AI) making significant strides in commerce, education, and healthcare.
At home, the UK’s FTSE 100 is up over 9% for the year; the index also defied gloomy economic forecasts last year with a 2024 return of just under 10%. The Government has prioritised “fixing the foundations” and shown a willingness to make bold decisions. While long-term growth prospects for the UK remain modest, only time will tell if Labour’s plans to curb borrowing and stabilise public finances will succeed.
As the second half of 2025 approaches, we advise that investors should maintain a diversified approach, while remaining vigilant to macroeconomic and geopolitical developments. Staying informed and adaptable will be key to navigating the evolving market landscape, and our Flagship Investment Portfolios are designed to be vigilant, whilst balancing risk and opportunity and attempting to protect against downside risk and capturing any upside potential.
Investing in the stock market has consistently rewarded those who stay the course. Historical data from the MSCI World Index (1999-2024) shows an average annual return of just over 7%. However, achieving these returns is rarely a smooth ride. Market volatility is part of the journey, but disciplined investing often pays off in the long run.
At Aquila, the Investment Committee meets regularly to evaluate whether adjustments to portfolios and strategies are needed. As non-discretionary managers, our goal is to provide you with a positive investment experience through effective fund selection. We recommend agile, flexible funds that can adapt to evolving market conditions. Our strategy involves selecting “best-of-breed” risk-managed funds with diverse styles and holdings. This active approach allows us to navigate the unpredictable economic and political landscape, aiming to deliver long-term benefits to our investors.
Our professionals focus on selling overvalued assets and buying undervalued ones to generate long-term returns. We are proud to report that the Aquila Flagship Portfolios have consistently delivered above-average returns. Please refer to the factsheet provided with your latest valuation for detailed insights into your selected portfolio.
If you have any questions or would like to discuss your investment strategy, we are here to help.
