Happy New Year from our team to yours, wishing you a wonderful year ahead!
As we welcome 2026, it’s an opportune time to reflect on how major asset classes have behaved over the past decade.
For the calendar year of 2025, all 12 asset classes delivered positive returns for the first time since 2019. Emerging Markets and International Equities finished strongly, supported by currency appreciation versus the U.S. dollar.
Small Cap and Large Cap U.S. equities ended 2025 with double‑digit returns as both the Russell 1000 and Russell 2000 indexes finished the year with positive returns.
Natural Resources and Global Infrastructure indexes were also winners in 2025 and have historically shown a lower correlation to traditional equity indexes. Notably, in 2022, when both International and U.S. Equity indexes experienced meaningful drawdowns, Natural Resources and Global Infrastructure indexes held up comparatively well, with Natural Resources indexes posting a positive return of +15.8%.
Our main takeaway from these results? Diversification is key.
A new year is often seen as an ideal time for investors to review portfolio concentrations and realign portfolios with long‑term strategic targets. While portfolios can naturally become overweight to the most recent winners, it’s an important reminder that past performance is not predictive of future results. Rebalancing to a thoughtful diversification across asset classes can help smooth the ride while still providing balanced upside potential.
What allocation shifts are you considering in 2026?
Source: Bloomberg, Morningstar, Dow Jones, Brookfield, FTSE Russell, MSCI, V-Square Quantitative Management LLC. Data is shown as at 12/31/2025. Data reflects indexes’ total returns for each calendar year, 2016 through 2025. For each calendar year, indexes are arranged by total return in descending order (highest return at top and lowest return at bottom). Select indexes were chosen to serve as proxies for asset classes. Other indexes are available.
This chart is for illustrative purposes only. Other indexes are available. It is not possible to invest directly in an index. Index returns do not reflect any management fees, transaction costs or expenses. Past performance does not guarantee future performance. The information and opinions contained herein are for informational purposes only, do not purport to be full or complete, do not constitute investment advice and may not be relied on. For more information, please see vsqm.com/disclaimer.
