Second Quarter 2025 Review.
- The quarter started badly for financial markets, notably equities, when President Trump’s tariff announcement on so-called ‘Liberation Day’, April 2nd, caused equity markets to fall precipitously, with the US S&P 500 Equity Index falling over 11% in the two days to April 4th. While markets knew tariffs were coming, the size and scale of them were far greater than anticipated.
- April also witnessed Trump indicating he might remove US Federal Reserve Chair, Jerome Powell, from his post. The possibility of US central bank independence being compromised led to a further weakening in the US Dollar. This, coupled with the inflationary impact of ‘Liberation Day’ tariffs, caused a spike in US government bond yields which likely resulted in…
- … a change of influence within the Trump administration with US Treasury Secretary, Scott Bessent, gaining more traction. This in turn caused a softening of the stance on tariffs and ultimately an unwelcome nickname for Donald Trump – ‘TACO man’ (Trump always chickens out’). A week after ‘Liberation Day’, equity markets began a rally that lasted until the end of the quarter – despite a significant raising of the stakes in the Middle East when firstly Israel attacked Iran, followed by the US targeting of Iranian nuclear sites.
- Despite concerns over the size of outstanding debt, its potential increase and the financing of it in the US and UK, bond yields in both countries edged lower (higher prices) over the quarter from their April peaks.
- The European Central Bank (ECB) cut rates by 0.25% to 2%, the eighth cut of that size in a year and thereby halving its official rate from a year ago, amid concerns for the European economy and the impact of Trump’s tariffs.
- The Bank of England reduced base rates by 0.25% to 4.25% in May and could have done more given the weak economic backdrop.
The tariff suspension that sparked the revival in equity markets in the second week of April expires on July 9th. There’s talk of the suspension being extended which would please markets, but that is by no means guaranteed. Tariffs have been a good revenue source since the beginning of April, so it is likely that some level of tariff will be a permanent fixture. Part of President Trump’s policy has been a weaker US Dollar to help US exporters. That seems likely to continue as a support for US exporters as their goods and services will be cheaper to foreign buyers.
The following table shows the performance of Pier’s portfolios for the second quarter of 2025 (in bold), year to date and year-on year to end June 2025.
| 01/04/2025 | 01/01/2025 | 01/07/2024 | |
| 30/06/2025 | 30/06/2025 | 30/06/2025 | |
| Q2 2025 | 2025 YTD | YoY | |
| Plus Four | 6.23% | 2.53% | 5.97% |
| Plus Three | 5.25% | 2.45% | 6.27% |
| Plus Two | 4.17% | 2.24% | 5.41% |
| Plus One | 3.33% | 2.57% | 5.41% |
| Plus Income | 2.62% | 3.10% | 6.74% |
| Prosper Four | 5.06% | 2.14% | 7.15% |
| Prosper Three | 4.46% | 2.31% | 6.69% |
| Prosper Two | 3.60% | 2.14% | 5.94% |
| Prosper One | 2.89% | 3.83% | 7.94% |
| Purpose Four | 5.35% | -0.07% | 2.34% |
| Purpose Three | 4.64% | 0.46% | 3.31% |
| Purpose Two | 4.03% | 1.31% | 3.97% |
| Purpose One | 3.27% | 1.88% | 4.40% |
Source Morningstar Direct
Performance is shown after deduction of both the Pier investment management cost and portfolio costs, but before deduction of platform costs.
Pier Portfolio Performance – Key Influences
Prosper
What Worked
Xtrackers S&P500 ETF (hedged to GBP): +11.44%
Fully participated in the rebound in US equities after the first week of April.
Returns were protected from a weakening US Dollar by being currency hedged into GBP.
L&G Global Equity Index: +6.84%
Global equities enjoyed a similar rebound from the lows of April and this tracker reflected that price improvement.
What Didn’t
Dimensional Global Value Equity: -1.51%
The underlying equity holdings in this holding performed positively, but the fund was negatively impacted by a lower US Dollar in GBP terms and the relative underperformance of smaller companies.
Plus
What Worked
Polar Capital Artificial Intelligence: +20.32%
While this fund can be viewed as themed holding, it is a global equity portfolio giving exposure to both the enablers of artificial intelligence and its beneficiaries/users . They were among the strongest rebounders from early April as they were seen as the economic winners going forward.
First Trust Nasdaq Cybersecurity ETF: 14.09%
Cybersecurity has been a key theme in 2025. Hacking as an instrument of war, or to extort money from corporates, has been on the rise. One thinks back to the damage caused to M&S after it was hacked. This fund invests in those software producers aiming to keep hackers out. It rebalances quarterly to avoid any one position becoming too influential on performance.
What Didn’t
Man Absolute Value: -2.06%
This absolute return fund has an excellent track record, but there will be the occasional quarter when their stock selection doesn’t work, as happened this quarter.
Plus Income
What Worked
Schroder Asian Income: +7.11%
The global equity recovery was felt in Asia, enabling this fund to post a good return from price appreciation and its diversified sources of income across Asia.
L&G Global Equity Index (Income): +6.79%
Global equities enjoyed a material rebound from the lows of April and this tracker reflected that price improvement, alongside the income generated from global equities held.
What Didn’t
Evenlode Global Income: -0.19%
The rally in broader global equities in the second quarter eluded this fund, for the most part due to its equity selection failing to absorb the positive backdrop for equities.
Purpose
What Worked
UBS MSCI USA Socially Resp. ETF Hedged: +11.12%
This was yet another fund that benefited from the combination of a revival in equity values and being hedged back to GBP. Its focus on responsible equities was a slight positive relative to the broader market.
iShares MSCI World SRI ETF GBP Hedged: +10.15%
Like the fund above this benefited from being hedged back to GBP thereby avoiding the negative impact of a weaker US Dollar, but in this case within a global context.
What Didn’t
Evenlode Global Income: -0.19%
The rally in broader global equities in the second quarter eluded this fund for the most part due to its stock selection failing to absorb the positive backdrop for equities.
Please remember that past performance does not predict future performance and it should not be the main reason for making an investment decision. The value of investments and income from them can fall as well as rise.
