Reports over the next week or so will go into greater detail about changes and other updates regarding the shifts witnessed during the second quarter, along with how potential changes could impact our stance as we move into the back half 2025.
Monday’s action marked the end of the second quarter of 2025. Reports over the next week or so will go into greater detail about changes and other updates regarding the shifts witnessed during the second quarter, along with how potential changes could impact our stance as we move into the back half of 2025. To start off that commentary, the table below looks at the performance of various asset class ETFs alongside related highlights.
Domestic Equities
While Q2 started off with downside action for most major indices, May’s action brought a notable rally, and June saw a steady continuation of that positive action. Technology, Industrials, and Communications Services assisted the Invesco QQQ Trust (QQQ) in leading major index funds, followed by the SPDR S&P 500 Trust (SPY), highlighting how large and mega cap stocks led the rally. With Q2’s performance, all of the major index ETFs but the Russell 2000 ETF (IWM) returned to positive territory on a year-to-date basis. Though the top three asset classes jockeyed for positioning during June, Domestic Equities emerged from the second quarter as the top ranked asset class. Even so, the analyst team continues to monitor the DALI Asset Class rankings as the top three ranked asset classes are separated by only eight buy (tally) signals as of 6/30.
International Equities
Despite continued uncertainty around tariffs, downside action within the US Dollar provided fodder for international equities to lead the broader asset classes during the second quarter. Emerging markets slightly edged out developed markets during Q2, but the 11% rally by both EEM and EFA highlight the breadth of improvement within the broader asset class. International equities now lead the major asset classes on a year-to-date basis and were the most improved within the DALI rankings. This led international equities moved to the top position within DALI briefly in mid-June for the first time since mid 2023. With international equities residing in second and still jockeying with the other two offensive asset classes – domestic equities and commodities – client portfolios will continue to maintain exposure to the asset class.
Commodities
For the second quarter in a row precious metals provided leadership for the asset class with gold and silver funds being up 5%. Late in the quarter, a rebound from crude oil brought the commodity up from multi-year lows and the broader energy space to roughly flat on a year-to-date basis. Agriculture continues to maintain a laggard position from a performance and relative strength perspective. Commodities briefly moved to number 1 on the back of the abrupt rally within crude oil in June, only to fall back to 3rd after crude’s subsequent retraction. Leadership within commodities remains narrow with precious metals continuing to carry the weight of the asset classes positive relative strength.
Fixed Income
Fixed income assets rose during the second quarter in a row as interest rates fell slightly during the quarter. Convertible bonds rebounded along with broader equities and international bonds provided notable performance leadership during the second quarter. After being the best performing area within Fixed Income last quarter, longer-dated treasuries, along with broader treasuries, were the worst performing areas of the asset class.
