11 Jul 2025
A return to fundamentals
Coming into 2025, investors couldn’t have been more bullish. Whether you measure it by allocations to equities or investor sentiment – by both ideals – investors were about as bullish as ever.
With a clear trend of indexing and the Mag 7, many investors are inordinately positioned toward U.S. large cap stocks.
While we have seen the Mag 7, tech stocks and the S&P 500® Index experience a dip and recovery this year, assets such as international stocks continue to outperform.
We believe that the conditions for the outperformance of non-S&P 500 equity assets remain intact.
Find out more in my 3Q 2025 The Download.
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GLOSSARY OF INDICES:
- S&P 500 Index: Tracks the stock performance of 500 leading companies listed on stock exchanges in the United States.
- U.S. Large Cap Growth: S&P 500 Growth Index = Measures the performance of the large-cap growth segment of the U.S. equity market.
- U.S. Large Cap Value: S&P 500 Value Index = Represents the value companies of the S&P 500 Index.
- U.S. Small Cap: S&P 600 Index = Measures the performance of small-cap stocks in the U.S.
- International Large Cap: MSCI EAFE Net Index = Measures the performance of large and mid cap representation across 21 developed markets countries* around the world, excluding the U.S. and Canada.
- International Small Cap: MSCI EAFE Small Cap Index = Measures the performance of small cap representation across developed markets countries around the world, excluding the U.S. and Canada.
- Emerging Markets: MSCI Emerging Markets Net Index = Measures the performance of large and mid cap representation across 24 Emerging Markets (EM) countries.
- US Core Bonds: Bloomberg U.S. Aggregate Bond Index = Broad-based fixed-income index used by bond traders and the managers of mutual funds and exchange-traded funds (ETFs) as a benchmark to measure their relative performance.
© Morningstar 2025. All rights reserved. The Morningstar Indexes are the exclusive property of Morningstar, Inc. Morningstar, Inc., its affiliates and subsidiaries, its direct and indirect information providers and any other third party involved in, or related to, compiling, computing or creating any Morningstar Index (collectively, “Morningstar Parties”) do not guarantee the accuracy, completeness and/or timeliness of the Morningstar Indexes or any data included therein and shall have no liability for any errors, omissions, or interruptions therein. None of the Morningstar Parties make any representation or warranty, express or implied, as to the results to be obtained from the use of the Morningstar Indexes or any data included therein.
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