Equity markets continued to climb in June, with both the S&P 500 and Nasdaq reaching new record highs in recent days. However, for euro-based investors, year-to-date returns remained negative at mid-year, reflecting the decline of the U.S. dollar against the euro.
S&P500 – USD
Source: Tradingview
June and YTD Numbers
So, should Long-Term Investors Hedge their USD Currency Risk
So far this year the U.S. dollar has depreciated over 12% versus the Euro.
Source: Tradingview. USD / Euro Year to 6//7/25
When long-term investors have core equity exposure to global developed and emerging market equities, approximately 65% of that exposure is to U.S. equities.
As an example, the S&P 500 was up 5% at the end of June. However, due to currency movements, this translated into a 7% loss when measured in euros. Despite this, it’s important to remember that the underlying value of the U.S. companies we own has increased, which is ultimately positive for long-term investors. Currency fluctuations only have a material impact if we need to convert investments back into euros today.
While investors can hedge currency risk, research suggests that for long-term investors, the benefits of currency hedging are limited. Remaining unhedged provides diversification benefits and avoids the ongoing costs associated with maintaining hedges. Partial hedging may be worth considering if you have a strong conviction about future U.S. dollar weakness, but for most long-term investors, staying unhedged is a sensible, evidence-based approach.
Trump’s BBB
On July 4th, U.S. Independence Day, Trump signed into law the ‘One Big, Beautiful Bill Act’ (BBB). As illustrated by The Economist’s chart below, the legislation is expected to add approximately $3.5 trillion to U.S. debt. Many estimates suggest the figure could be even higher if some of the tax cuts are made permanent.
Source: economist.com
The analysis also supports the view that this Bill disproportionately benefits the wealthy, while placing a greater burden on lower-income households.
Source: economist.com
Other impacts of BBB:
Debt & Interest Costs: The BBB could significantly increase government debt-repayment costs, making a fiscal crisis more likely and raising concerns among investors about the risks associated with U.S. Treasuries and potential inflation.
Medicaid Cuts: The BBB proposes $1 trillion in Medicaid cuts over ten years, likely increasing the number of uninsured Americans by nearly 12 million, largely due to work requirements that have proven ineffective in boosting employment.
Climate Rollback: The BBB effectively dismantles Biden’s Inflation Reduction Act, potentially slashing America’s projected greenhouse gas emissions reduction by over 10 percentage points by 2035.
Observations Based on What the Wealthy Are Doing
The recently published BNY 2025 Investment Insights for Single Family Offices report offers a detailed look at the priorities and strategies of 282 of the world’s largest family offices, each managing at least $250 million in assets. Drawing on decades of experience, BNY’s study highlights how these sophisticated investors are adapting to today’s market uncertainty—often setting the pace for broader investment trends and revealing key shifts that could shape the future of wealth management.
1. Evolving Private Market Exposure
Private equity remains a cornerstone of wealth portfolios, but the approach is broadening. Investors are increasingly pursuing opportunities beyond traditional private equity funds, including direct investments and co-investments. There is also growing interest in other private market opportunities such as direct lending and infrastructure, driven by the search for enhanced returns and diversification.
2. Growing Interest in Digital Assets
The digital asset space is becoming an integral part of strategic wealth management. This category includes cryptocurrencies, tokenised assets, and stablecoins among other areas.
Cryptocurrency:
2024 was a significant year for the sector, marked by the SEC’s approval of the first Bitcoin ETF and the election of Donald Trump, who has publicly expressed support for digital assets.
Tokenisation:
Tokenisation refers to converting ownership of real-world assets—such as property, art, or company shares—into digital tokens on a blockchain. These tokens enable fractional ownership and can be easily bought, sold, or traded, enhancing liquidity and accessibility.
Examples include:
- Fractional ownership of commercial property via digital tokens
- Purchasing shares in high-value artwork through blockchain platforms
- Tokenised bonds or stocks traded directly online
- Dividing ownership of commodities like gold into digital tokens.
Stablecoins:
Like cryptocurrencies, stablecoins use blockchain technology but are designed to minimise volatility by pegging their value to traditional assets such as the Euro or US dollar. They act as a bridge between the digital asset space and traditional finance, making them more practical for transactions and portfolio integration.
3. AI Highest Conviction Investment Theme
The survey identifies Artificial Intelligence (AI) as the leading investment theme for the next five years, alongside renewable energy and the ongoing trend of deglobalisation.
4. Luxury Assets
Luxury assets have become a broad, catch-all category encompassing a wide range of items often viewed as alternative stores of value. This includes watches, jewellery, art, classic cars, and even ownership stakes in sports teams. While the survey suggests that luxury assets currently play only a “muted” role in family office portfolios, there are signs of growing interest, particularly as investors seek diversification and uncorrelated assets.
Top Three Risks for Investors
While new opportunities are emerging, so too are significant risks that demand careful attention. According to the survey, the top three risks shaping investment decisions over the next five years are:
- Inflation: Persistent inflation continues to erode purchasing power and challenge investment returns, requiring active portfolio management.
- Geopolitical Risk: Global tensions and political instability are driving market volatility and influencing asset allocation decisions.
- Cybersecurity Threats: The growing frequency and sophistication of cyberattacks present serious risks to both operational integrity and the protection of sensitive financial data.
These risks are at the forefront of strategic planning for leading family offices, reinforcing the need for resilient, diversified portfolios and proactive risk management.
Gold
We recommend gold as a core holding within client portfolios, positioned as a long-term store of value. Its performance in recent years has been exceptionally strong, with returns of +29% in 2024 and a further +25% year-to-date in 2025. Gold has also solidified its role at the institutional level, now ranking as the second-largest reserve asset (@20%) for central banks, surpassing the Euro (16%). The U.S. dollar remains the top reserve asset.
Source: FT
Update on 2025 Predictions at the Halfway Mark
In January’s Markets in 1 Minute, I shared a set of 2025 predictions compiled by Visual Capitalist, drawing on insights from firms like Deloitte, Goldman Sachs, Reuters, the IMF, Bloomberg, and others. We’re now halfway through the year — so how are those expert predictions holding up? Here’s the scorecard so far.
Source: Visual Capitalist
So – What Should Investors Do?
Navigating Uncertainty with Confidence
The Trump administration’s departure from established norms in global trade and international relations has introduced significant uncertainty for markets, heightening concerns around inflation, slower growth, and geopolitical risks.
While market downturns are always unsettling, our guidance remains the same: stick to your investment plan.
It’s natural to feel concerned when headlines highlight sharp market drops, but volatility is a normal part of long-term investing. A disciplined, diversified portfolio is key to navigating uncertain times. Patience, discipline, and a measured approach remain essential for long-term success.
Working closely with your advisor and staying committed to a well-structured plan will help you weather market shifts and capture future opportunities.
Expect Continued Uncertainty
Markets face ongoing volatility, particularly due to unpredictable trade policies and government actions. The full impact of tariffs and other measures may take weeks or months to unfold. In the meantime, reacting hastily based on fear often does more harm than good.
Stay Focused on Your Long-Term Plan
It’s tempting to “wait for the dust to settle” by selling off positions during downturns. But doing so could mean missing future gains. Your investment strategy is built for the long term—staying the course remains the most effective path.
Consider Opportunistic Investing
If you’ve been gradually building your equity exposure, periodic market declines may present attractive buying opportunities. History shows that investing during downturns can significantly enhance long-term returns.
The Bottom Line:
Stay committed to your long-term plan. Market volatility is uncomfortable but expected—and can often open the door to significant opportunities. By maintaining perspective and keeping your focus on long-term goals, you’ll be better positioned to weather market storms and come out stronger.
John Tuohy is Chief Executive of Acuvest, an Irish-owned, independent advisory firm specialising in wealth management, pensions, and investment advisory services for individuals, companies, pension schemes, charities, and institutions. John is a Chartered Financial Analyst (CFA) and a Fellow of the Chartered Association of Certified Accountants.
