Emily Thomas-Adderson

2025 was a year defined by heightened geopolitical uncertainty, shifting monetary policy expectations, and a broadening of market leadership. Global markets ended the year on a resilient note, supported by moderating inflation, solid corporate earnings, and a cautious shift towards monetary easing. Disinflationary trends across the US, Europe, and the UK became more established as supply chains normalised and fears of tariff-induced inflation eased, allowing central banks to begin modest rate reductions.

Equity markets delivered positive returns, although performance was uneven across regions and sectors. Against this backdrop, strong performance was driven by a strategic overweight to Asia, emerging markets, European value equities, and commodities, reflecting a disciplined focus on areas offering attractive valuations and robust growth potential. In particular, BlackRock World Mining was a standout contributor, benefiting from elevated gold, copper, and battery metal prices, which were supported by infrastructure investment, energy transition themes, and supply constraints. Other equity contributors included European value strategies and emerging market cyclicals, which capitalised on regional growth dynamics outpacing developed markets.

Bond markets remained challenging as yields stayed elevated, reinforcing the importance of broad diversification beyond traditional stock-bond allocations. Within this context, alternative strategies continued to demonstrate their value, providing uncorrelated returns, smoothing volatility, and supporting capital preservation. A key development in October was the launch of the Apollo Diversified Multi-Strategy Fund, now incorporated across our model portfolios. This fund offers exposure to a range of absolute-return strategies designed to deliver consistent, uncorrelated returns across equities, fixed income, commodities, and alternative markets, enhancing portfolio resilience and supporting long-term risk-adjusted outcomes.

Portfolio management during the year also involved taking some profits from high-performing thematic equity positions and reallocating capital to globally focused active managers targeting quality businesses at attractive valuations. Strategic adjustments within fixed income and alternative allocations were made to maintain diversification, liquidity, and downside protection.

Looking ahead to 2026, the investment landscape is expected to remain highly data-dependent and sensitive to geopolitical developments. Growth is likely to moderate but remain positive, supported by ongoing investment in structural areas such as artificial intelligence, digital infrastructure, and energy transition. Outside the US, valuations in Asia, emerging markets, and selective frontier regions remain attractive, providing opportunities for disciplined active management.

In this environment, a balanced, diversified approach continues to be critical. Alternatives and multi-strategy allocations, including the Apollo Diversified Multi-Strategy Fund, remain key differentiators, providing uncorrelated sources of return and enhancing resilience. Active regional and thematic positioning, combined with disciplined risk management and broad diversification, positions portfolios to capture growth opportunities, preserve capital, and navigate volatility in 2026.

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