In a reversal of a trend in recent years, more investors sought opportunities outside of the US and moved to International Equities in the first quarter of 2025. Overall global equity markets lost -1.6% in the first quarter as measured by the MSCI All Country World IMI Index.
US Equity markets led the decline in the first quarter as the Russell 3000 Index posted a negative 4.72% return. In a sign of the reversal of fortunes for US equities, the Magnificent 7 stocks (Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla) which accounted for 65% and 57% of the returns of the S&P 500 over the past two years respectively, trailed the broad market significantly. Through March 31st, all seven stocks experienced negative returns with six of the seven stocks experiencing double digit losses. Meta Platforms was the best performing of the seven stocks with a -1.5% decline for the first quarter. Not surprisingly, Tesla was the worst performing stock with a -34.7% return.
Investors sought opportunities in International Developed Equity markets in the first quarter, driving international equities higher. As measured by the MSCI World ex Usa IMI Index, International Developed markets gained 5.82% for the first quarter. Emerging markets also had a positive showing as the MSCI Emerging Markets IMI Index showed a positive return of 1.70% for the first quarter.
Bond markets also showed disparity in the returns between domestic and international fixed income instruments. For the first quarter, US Bonds gained 2.78% as measured by the Bloomberg US Aggregate Bond Index. There is little doubt that some investors fled to bonds to escape the increased volatility in
domestic equity markets. International bonds saw a small decline in the first quarter as the Bloomberg Global Aggregate ex-USD Bond Index saw a -0.17% loss.
While it is important to monitor quarterly performance, it is equally important to maintain discipline in investment strategies tied to your
financial planning goals. While market conditions may necessitate portfolio strategy changes on occasion, disciplined and patient investors are very often rewarded for staying the course in the face of short-term changes and volatility.
Sources: Dimensional Funds, Investor’s Business Daily