2025 was a reminder that strong returns and uncomfortable markets can coexist. Despite everything going on in the world, 2025 proved another good year for investors as the returns table below shows.
December and YTD Numbers
As ever, the headline numbers only tell part of the story — currency moves and volatility shaped the real investor experience.
From 2025 into 2026: Markets Learn to Live with Discomfort
2025 delivered strong headline market returns, but beneath the surface it was a year defined by persistent unease. Markets began the year absorbing the return of Donald Trump to the US presidency with relative calm, but sentiment shifted as policy direction — particularly around tariffs and trade — became clearer. Politics, policy and geopolitics remained a constant presence rather than a passing distraction.
Global equities posted robust gains in local currency terms, yet for euro-based investors returns were far more muted. A materially weaker US dollar turned very strong US equity performance into single-digit euro returns, pushing currency exposure — and the question of hedging — firmly back into portfolio discussions.
Central banks moved cautiously. The ECB cut rates to 2% by mid-year and appears content to pause. In the US, the Federal Reserve — having begun easing in 2024 — stayed on hold for much of 2025 before delivering three cuts from September onward. With inflation still running above target, the scope for further easing remains constrained, even as growth cools. In that environment, bonds quietly began to reassert their role in diversified portfolios, though not without intermittent volatility.
Geopolitical risk remained elevated. Progress towards peace in Ukraine was limited, while developments in the Middle East showed tentative improvement, helping to reduce tail-risk concerns. Gold stood out as a clear beneficiary of this backdrop, supported by central-bank buying, rising debt levels and political uncertainty — reinforcing its role as a strategic asset rather than a tactical trade.
The themes shaping markets in 2025 — artificial intelligence, deglobalisation, energy transition, deregulation, geopolitical realignment and tokenisation/DeFi — did not resolve themselves. Instead, they matured, setting the stage for 2026.
Looking ahead, markets are now less focused on whether volatility returns and more on how persistent it becomes.
A new Federal Reserve Chair, appointed in a more politicised environment, places central-bank independence firmly in the spotlight. US midterm elections add another layer of uncertainty around tax, trade and fiscal policy. At the same time, artificial intelligence enters a “show-me” phase, with investors increasingly demanding that heavy capital expenditure translates into sustainable earnings and cash flows.
While inflation in the Euro area is at target, in the US inflation risks remain, raising the possibility that “higher for longer” real rates begin to bite — particularly in parts of the bond market — and potentially placing renewed pressure on the US dollar. Geopolitically, attention remains on whether meaningful progress can be made towards peace in Ukraine, and whether a more confrontational US stance towards Europe ultimately acts as a catalyst for reform and implementation of key Draghi report recommendations.
Taken together, the message from 2025 into 2026 is clear: volatility is no longer an anomaly to be traded around — it is the operating environment markets must adapt to. Against that backdrop, portfolio construction matters at least as much as market calls.
The emerging consensus for 2026 remains constructive but disciplined. Equity exposure continues to make sense for long-term investors. Fixed income, meanwhile, has re-established its role — not just as a source of income, but as an important shock absorber — with outcomes increasingly dependent on being deliberate around duration and blending government bonds, investment-grade credit and selectively higher-yielding segments.
For investors with longer time horizons, particularly high-net-worth clients, private markets, infrastructure and real assets increasingly sit alongside traditional portfolios as “plus” allocations. These areas are not substitutes for liquid assets, but complements — offering diversification, income potential and exposure to structural themes that public markets do not always capture efficiently.
The bottom line? 2026 is unlikely to be a smooth year. But for long-term investors with a plan, diversification and patience, it offers opportunity rather than a reason to stand aside.
Themes Dominating Thinking for 2026 and the Rest of This Decade
In my view, several powerful themes are already unfolding and are likely to shape political decision-making, corporate behaviour, and investment markets through 2026 and well beyond. At their core, these themes reflect three simple but important ideas:
- Energy is becoming increasingly scarce, with global supply struggling to keep pace with structurally rising demand.
- As a consequence, advanced semiconductor chips will continue to command a premium, even as competition among chip manufacturers intensifies.
- Politically, the US and other major economies are likely to continue prioritising security, particularly around energy independence and control over the supply of advanced semiconductor technology.
2026 Bingo Card
Courtesy of Visual Capitalist, which collated the views of more than 2,000 experts, the following “2026 Bingo Card” provides an interesting snapshot of market forecasts.
So – What Should Investors Do?
Staying the Course in a Noisy World
Markets continue to move through shifting headlines and policy surprises, but for long-term investors, the playbook remains familiar: stay patient, stay diversified, and stay focused on the bigger picture.
Our key messages:
- Stay Invested: Markets move quickly, and missing even a few strong days can make a big difference to long-term returns.
- Trust Your Plan: A well-diversified portfolio is designed to navigate periods like this. If your goals haven’t changed, your investment approach shouldn’t either.
- Look for Opportunity: Periods of volatility often create entry points. For disciplined investors, uncertainty can be an ally, not an obstacle.
Key Takeaway:
Long-term success is driven by confidence, not reaction. Staying the course with a robust plan—and good advice—remains the most effective way forward.
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.
