Markets in 2025: Gains Continue as Leadership Broadened
Market performance in 2025 remained positive across most asset classes, with leadership broadening meaningfully compared to 2024. U.S. large-cap equities continued to post solid gains, though returns moderated from the prior year’s outsized levels, particularly among mega-cap and technology-heavy indices. The Nasdaq Composite advanced 20.36%, while the S&P 100 and S&P 500 gained 18.76% and 16.39%, respectively, all trailing their stronger 2024 performances. Mid- and small-cap stocks showed modest improvement, with the Russell 2000 rising 10.75%, but continued to lag larger peers. Canadian equities significantly outperformed, led by a 39.71% rally in mid-cap stocks and strong gains in large-cap names, as the S&P/TSX Composite rose 28.25% and the TSX 60 advanced 25.48%. International equities were a standout in 2025, with ACWX climbing 32.60% after a muted 5.17% return in 2024, reflecting improved global growth expectations. Outside of equities, commodities and bonds posted steady gains, with fixed income meaningfully outperforming its 2024 results as yields stabilized, while cash returns declined to 4.15%, down from 5.56%, reducing the relative attractiveness of short-term instruments.
SIA Sector Performance Review 2025: Commodities Take Command
A broad middle tier of sectors posted positive but more moderate returns, reflecting uneven participation across the economy. Consumer-oriented and cyclical areas such as SIA Retail (18.69%) and SIA Energy (16.27%) delivered respectable gains, while industrial and production-related sectors; including SIA Wholesale (13.27%), SIA Manufacturing (12.06%), and SIA Construction (11.77%) benefited from steady economic activity. Transportation, Automotive, and Media all generated low-double-digit returns, while SIA Health Services (7.95%), SIA Consumer Durables (7.28%), and SIA Computer Hardware (5.56%) lagged but remained positive, highlighting a clear dispersion between leaders and average performers.
At the other end of the spectrum, several sectors that were leaders in 2024 struggled in 2025. SIA Computer Software (-2.42%), SIA Insurance (-2.91%), and SIA Leisure (-3.95%) moved into negative territory, underscoring a reversal from last year’s momentum-driven winners. Defensive consumer segments also lagged, with SIA Consumer Non-Durables (-7.81%), SIA Food and Beverages (-12.56%), and SIA Diversified Services (-15.34%) posting notable declines. SIA Tobacco was the weakest sector overall, falling 30.58%, reinforcing the importance of sector selection and active positioning within an equal-weight approach.
2025 International Markets: Strong Returns, Wide Dispersion
At the lower end of the spectrum, several markets underperformed the ACWX benchmark despite posting positive returns. Japan (FLJP) 20.41% and the United States (FLQL) 19.20% lagged most international peers, while Australia (FLAU) 12.50% and Argentina (ARGT) 11.69% saw returns moderate sharply from prior leadership. Emerging markets such as Indonesia (EIDO) 4.89%, Thailand (THD) 2.36%, and India (FLIN) 1.82% struggled to gain traction, while Turkey (TUR) -1.53% and Saudi Arabia (FLSA) -11.00% were the weakest performers overall. This wide dispersion relative to ACWX highlights the value of using ETFs as country proxies and the importance of selective geographic exposure within international equity allocations in 2025.
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