Major Asset Classes: June 2025 Performance Review

Emerging market stocks recorded the strongest gains among major asset classes in June, extending their rally, while US equities also delivered robust performance, contributing to a broad-based rally across all asset classes. This strong market momentum is further evidenced by the Global Market Index (GMI)'s 4.2% rise in June, pushing its year-to-date gain to 8.6%, though developed foreign stocks retain a commanding lead for the year.

Analysis

Global markets demonstrated broad-based strength in June, with emerging market equities, represented by ETFs such as VWO, leading all major asset classes and extending their recent rally. US equities also delivered a robust second-place performance, contributing to a significant 4.2% gain for the Global Market Index (GMI) during the month. This strong performance has pushed the GMI's year-to-date return to a solid 8.6%, reflecting a powerful rally for the multi-asset-class benchmark. Despite the strong monthly showing from emerging markets, it is crucial to note that foreign stocks in developed markets continue to maintain their commanding lead in year-to-date performance, highlighting a potential divergence between short-term momentum and longer-term trends.

Key Decisions for Investors

• Given the strong June performance and positive sentiment for emerging market stocks, investors could consider a tactical overweight to this asset class to capture the current momentum, while monitoring for signs of sustainability.
• The robust, broad-based rally, evidenced by the Global Market Index's 4.2% monthly gain, reinforces the strategic value of maintaining core diversified holdings across multiple asset classes to participate in widespread market upside.
• Investors should closely watch whether the leadership shift towards emerging markets in June represents a new, durable trend or a short-term rotation, as developed foreign market stocks still hold the year-to-date performance lead, a key consideration for strategic allocation.