It remains as important as ever for us as a business to reflect on our investment performance and the ongoing strategic decision-making process of our team. In this update, Myles Renouf, Senior Investment Manager at Oakglen Wealth reflects on the first half of 2025, a period marked by geopolitical tensions, shifting monetary policy expectations, and surprising market resilience.
Despite a backdrop of heightened geopolitical risk—including U.S. and Israeli strikes on Iran—and ongoing uncertainty surrounding President Trump’s tax reform bill, global markets produced strong returns for investors in H1 2025.
Equities delivered robust gains, overcoming geopolitical tensions and policy uncertainty. In the U.S. markets surged—particularly during the month of June—as fears of escalation with Iran eased and optimism around tax reform grew. The S&P 500 and Nasdaq reached record highs, aided by resilient earnings and hopes of a soft economic landing.
UK equities benefitted from attractive valuations, drawing capital from more expensive markets like the U.S., while Continental European equities advanced steadily, supported by falling inflation, accommodative policy, and Germany’s increased infrastructure and defence spending.
In China, large-cap equities rallied over 20% year-to-date, fuelled by aggressive fiscal stimulus and loose monetary policy. Investor sentiment improved as authorities reaffirmed their commitment to pro-growth reforms and domestic demand recovery.
Source: Bloomberg
Fixed income markets delivered modest gains, despite headwinds from the U.S. Congress’s efforts to pass a budget projected to add approximately $4 trillion to the national deficit over the next decade. Concerns also persist in the UK regarding the sustainability of the public sector deficit and the potential impact of rising minimum wage and National Insurance contributions on the private sector.
Bloomberg Aggregates Total Returns Indices
Source: Bloomberg
Gold was a standout performer in H1 2025, gaining over 21% as concerns over the ballooning U.S. deficit and sustained dollar weakness drove demand. Continued central bank accumulation further supported the rally in the yellow metal.
Bitcoin approached record highs, closing June at $107,135, as investors sought alternatives to fiat currencies. Sentiment was boosted by President Trump’s pro-crypto stance and regulatory easing.
Oil experienced a turbulent first half, with prices swinging sharply due to a combination of increased OPEC output and geopolitical shocks, including Israel’s military action against Iran.
Source: Bloomberg
Our discretionary strategies delivered strong relative performance in the first half of 2025:
- Diversify Strategy (medium risk): Delivered a return of +3.1%, outperforming the ARC Sterling Balanced Asset PCI peer group, which returned +1.6%. Since inception (31 December 2019), the strategy has achieved a total return of +33.0%, significantly ahead of the peer group’s +16.7% return over the same period.
- Grow Strategy (high risk): Returned +2.9% in H1 2025, also ahead of the ARC Sterling Equity Risk PCI, which posted a +1.0% return. Since inception, Grow has delivered a cumulative return of +51.4%, comfortably outperforming the peer group’s +25.9%.
Key Themes from Our H2 2024 Outlook – Progress in H1 2025
1. Defence Spending
As anticipated, defence budgets rose sharply in H1 2025, particularly across Europe, in response to escalating geopolitical tensions. Germany led the way with a substantial increase in military investment, part of a broader effort to modernise its defence infrastructure. This trend was replicated across the Eurozone, signalling a structural shift in fiscal priorities and improved returns for shareholders of defence companies.
2. Mega-Cap Tech Resurgence
After a volatile start to the year, mega-cap tech stocks rebounded strongly. Nvidia surged over 22%, driven by AI momentum, while Microsoft and Broadcom each gained around 19%. Meta Platforms and Oracle also posted solid double-digit returns. The “Magnificent 7” regained investor favour once again in Q2, in part due to strong corporate earnings, and also on renewed enthusiasm for AI and cloud technologies. We continue to invest selectively in AI-exposed names.
3. Foreign Exchange Volatility
As expected, FX markets experienced heightened volatility. The U.S. dollar weakened due to rising deficit concerns, political interference in U.S. Federal Reserve (Fed) policy, and uncertainty around President Trump’s tax agenda. In contrast, sterling strengthened, supported by stable UK policy and investor rotation away from dollar assets. The euro also appreciated, aided by falling inflation and accommodative European Central Bank (ECB) measures.
4. Economic Policy Divergence
A clear divergence in economic policy emerged between the U.S., Europe, and the UK. The U.S. has pursued expansive fiscal measures, including a proposed $4 trillion budget, alongside political pressure on the Fed—raising inflation concerns and weakening the dollar. Meanwhile, the ECB eased policy to support growth, with Germany leading infrastructure and defence investment. The UK maintained a cautious stance, holding rates steady while monitoring wage growth and employer costs.
Looking ahead, we anticipate maintaining a higher allocation to non-U.S. assets than we have held previously. Our outlook for the U.S. dollar remains bearish, driven by structural and policy-related headwinds and we continue to find attractively valued opportunities in Europe, UK and Asia.
We also remain cautious on the long end of most government bond yield curves. With expansive fiscal spending becoming increasingly entrenched, we view a steepening of yield curves as the most probable trajectory for interest rates. This reflects both inflationary pressures and the growing supply of government debt.
To find out more about our discretionary investment management services, please contact the below:
Jersey
| Jersey@oakglenwealth.com | |
| Tel | +44 (0) 1534 789 942 |
UK
| UK@oakglenwealth.com | |
| Tel | +44 (0) 20 4583 1118 |
Capital may be at risk.
The ARC Private Client Indices are determined by Oakglen Wealth to be the most suitable benchmark for comparison purposes only. It must be noted that the last 3-month performance figures may be based on ARC estimates and may be subject to revision.
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