Third Quarter 2025 Review.
- US President Donald Trump dominated the financial market headlines in the third quarter. Tariffs were in focus as were the levels/percentages that would be imposed. Many ‘deals’ were done before the delayed imposition on August 7th, itself delayed from a month earlier
- Official US Interest Rates were cut in September for the first time in 2025
- The Bank of England cut base rates to 4% in August
- Gold rose on raised geopolitical concerns and fears of US political interference in US interest rate setting – the remit of the Federal Reserve (independent since 1913). Gold has been steadily acquired by central banks keen to diversify their reserves away from US Dollars
- Global equity markets looked beyond geopolitical issues to post positive returns, aided by better than forecast earnings and the prospect of lower interest rates
- Major developed bond markets were buffeted by concerns over budget deficit financing – especially in the US and UK. Consequently, long maturity yields were under pressure to move higher (lower prices) in the UK, whereas US yields were more stable with the US Treasury choosing to issue more of its debt in shorter maturities
- In contrast to the US Dollar’s significant decline against Sterling in the first half of 2025, the US currency was marginally stronger in the third quarter
Portfolio Activity
The third quarter activity for Pier portfolios centred around continuing to mitigate risk ensuring portfolios are not susceptible to specific risk from:
- Equity concentration in a few very large US companies
- Non-GBP currencies
- Duration or interest rate risk in longer-dated bonds
In general, the portfolios remain broadly diversified across bonds and equities. Bond exposure is focused on short to medium maturities to provide better price stability than longer maturities. Equity exposure is focused on global equities where valuations are not stretched and profitable companies proliferate.
Currency risk is centred on having a low non-GBP exposure with particular reference to US Dollars. UK retail investors in the cheaper unhedged global equity trackers have been hit by the US currency’s weakness in 2025. Despite a relatively stable third quarter, the US Dollar is weaker by 10% this year to-date, delivering a negative impact to Sterling returns from unhedged US Dollar exposure. Pier manages foreign currency risk in order to deliver Inflation* Plus returns.
* Inflation as measured by the UK Consumer Price Index, aka CPI.
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.
Portfolio Performance
The following table shows the performance of Pier’s portfolios for the third quarter of 2025 and the year to date (end of September 2025).
| 01/07/2025 | 01/01/2025 | |
| 30/09/2025 | 30/09/2025 | |
| Last Quarter | YTD | |
| Plus Four | 6.66% | 9.35% |
| Plus Three | 5.74% | 8.33% |
| Plus Two | 4.52% | 6.86% |
| Plus One | 3.31% | 5.96% |
| Plus Income | 4.53% | 7.77% |
| Prosper Four | 7.55% | 9.87% |
| Prosper Three | 6.28% | 8.76% |
| Prosper Two | 4.87% | 7.13% |
| Prosper One | 5.06% | 9.11% |
| Purpose Four | 5.25% | 5.18% |
| Purpose Three | 4.51% | 4.99% |
| Purpose Two | 3.67% | 5.02% |
| Purpose One | 2.78% | 4.71% |
Source: Morningstar Direct
Performance is shown after deduction of both the Pier investment management cost and underlying portfolio costs, but before deduction of platform costs.
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.
Pier Performance – Key Portfolio Influences
Prosper
What Worked
Fidelity Index Emerging Markets Equity: +13.09%
Emerging market equities fully participated in the equity rally that started in April and caught up with other markets, having lagged previously.
L&G Japan Index: +10.04%
Despite the political challenges and a substantial rise in Japanese Government bond yields, Japanese equities performed well over the quarter on corporate governance reform and a renewed focus on shareholder value.
What Didn’t
L&G All Stocks Gilt Index: -0.83%
Concerns over how the UK Government would finance its burgeoning budget deficit has led to higher bond yields (lower prices). Consequently, this tracker posted a small negative return in the third quarter.
Plus
What Worked
Polar Capital Artificial Intelligence: +13.54%
While this fund can be viewed as a themed holding, it is a global equity portfolio giving exposure to both the enablers of artificial intelligence and its beneficiaries. The AI boom ensured this fund delivered another excellent quarter.
Fidelity Index Emerging Markets Equity: +13.09%
Emerging market equities fully participated in the equity rally that started in April and caught up with other markets, having lagged previously.
What Didn’t
Man Absolute Value: -4.39%
This absolute return fund has an excellent long-term track record, but there will be the occasional quarter when their stock selection doesn’t work, as happened this quarter largely from their short positions.
Plus Income
What Worked
Schroder Asian Total Return: +13.99%
The global equity recovery spread to Asia enabling this fund to post an excellent return.
Schroder Asian Income: +11.33%
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.
What Didn’t
Evenlode Global Income: -2.58%
The rally in broader global equities in the third quarter eluded this fund, for the most part due to its equity selection failing to meaningfully absorb the positive backdrop for equities.
Purpose
What Worked
iShares MSCI World SRI ETF USD: +10.75%
A beneficiary of a general appreciation in global equities in the third quarter.
Schroder Global Sustainable Value Equity: +8.07%
Like the above fund, this holding was a beneficiary of a general appreciation in global equities and one where more attractively priced (value) companies did well, as investors became wary of lofty valuations in US mega tech/AI related companies.
What Didn’t
Evenlode Global Income: -2.58%
The rally in broader global equities in the third 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.
