Despite the fourth quarter of 2025 being marked by heightened volatility and shifting investor sentiment, both equity and fixed income markets posted positive returns. Investors navigated challenges including the US federal government shutdown – reported as the longest on record – alongside ongoing concerns over elevated AI valuations and uncertainty around the path of monetary policy.
Global equity markets advanced over the quarter, with the MSCI World (local currency) index rising 3.4%. Early in the quarter, enthusiasm for AI and a strong US corporate earnings season supported growth stocks, while progress in late-stage US-China negotiations helped ease trade concerns and improve sentiment. US equities performed well but lagged other regions, as renewed AI valuation concerns and the shutdown backdrop weighed on overall returns. European equities posted strong gains, supported by a more stable inflation and interest-rate environment, while UK equities were also notable outperformers, benefiting from a softer Sterling and declining Gilt yields. Emerging market equities continued to advance, returning 5.6% (MSCI Emerging Markets, local currency), supported by ongoing US-China trade developments and a weaker US Dollar, though gains moderated into year-end as investors took profits and valuation concerns re-emerged in technology-heavy markets. Japanese equities were also strong performers, buoyed by a weaker Yen and expectations of continued supportive policy settings.
Fixed income markets were also positive, though more modest, returning 0.6% (JPM GBI, USD Hedged) amid notable market swings. US Treasuries rallied early in the quarter on softer inflation and labour market data, as the Federal Reserve lowered rates by 25bps in October and again in December. As year-end approached, markets reassessed the outlook for policy and broader fiscal concerns pushed US yields higher in December. In Europe, the European Central Bank kept rates unchanged throughout the quarter, though updated projections and messaging in December were more hawkish, reflecting firmer growth expectations and stickier core inflation dynamics. German Bunds struggled amid expectations of increased fiscal spending and higher net new borrowing. In the UK, Gilts were supported earlier in the quarter by easing expectations, though front-end yields sold off in December following a 25bps Bank of England rate cut that was viewed as relatively hawkish. Japanese government bonds lagged through the quarter, with yields rising on the back of economic stimulus package approvals, policy normalisation concerns and hawkish signals from the Bank of Japan. In credit, a weaker US Dollar supported emerging market debt, while global investment grade and high yield bonds posted solid gains, although sentiment was marginally tempered by valuation concerns in parts of the technology/AI complex.
JPMAM anticipates economic growth in 2026 to be slightly above trend, fueled by increased fiscal spending and capital investment. As a result, JPMAM prefers to maintain a moderately risk-on stance in portfolios, with a particular focus on the Asia Pacific region, which is supported by long-term structural growth drivers such as AI and domestic consumption.
Additionally, JPMAM maintains a slight overweight in U.S. and Japanese equities. In fixed income, JPMAM continues to favor credit for their attractive yields and maintains a positive outlook on emerging market debt, which is expected to benefit from a structurally weaker U.S. dollar. JPMAM also holds a neutral view on duration.
The Retirement Portfolio is a single investment solution which employs a ‘glidepath’ strategy.
The investment team considers current market conditions in managing the portfolio. Additionally for the Retirement Portfolio, your portfolio allocation will shift based on your own timeline to retirement.
When you are further out from retirement, the portfolio allocation is geared towards higher risk assets such as equities to help you accumulate and grow your wealth over years to retirement. The longer time horizon to retirement would also allow for your portfolio to ride out ups and downs of markets.
Over the years and as you move closer to retirement, risk is gradually dialled back by reducing allocation in higher risk assets and increasing allocation to fixed income funds, building a more conservative and stable portfolio to ease into your retirement years.
You can consider the Retirement Portfolio if:
- You want to invest to build your wealth for retirement
- You don't have time to actively monitor markets
- You want experts to nurture your investments
- You want to supplement other insurance / investments to reach your retirement goals