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20th January 2026
Cappuccino Commentary
December 2025 Review
Equity markets finished the year on a strong note with most regions delivering double digit returns over the period and hitting all-time highs. This was achieved despite several potential headwinds including Trump’s tariff hikes, growing concerns about technology valuations and recent concerns of a potential Chinese slowdown.
Looking at December, the UK was a strong performer, returning +2.3%, bolstered by strong corporate earnings and the hope for further rate cuts, and finished the quarter as the best performing equity market. The FTSE 100 went on to surpass 10,000 points for the first time after the New Year break. Europe led markets (+2.5%) on the back of increased stimulus spending and improving economic growth. Emerging Markets also fared well over the month (1.1%) and over the year. They benefitted from strong growth prospects and a weakening dollar. Over the quarter, Latin America was the best performing region benefitting from commodity producers (gold and copper) while Chinese stocks fell over concerns of a potential slowdown and signs of further weakness in the Chinese property market.
The US equity market softened -0.6% over the month but still added just under 10% for the year. 2025 was, in recent times, an outlier year where other major regions significantly outperformed the US equity market in sterling terms. This was, as noted above, largely attributed to dollar weakness as the dollar experienced its largest annual decline since 2009. Artificial Intelligence (AI) has been a dominant theme in the US driving most of the gains over the year. However corporate profits have broadly outperformed expectations and GDP growth remains quite strong compared to developed market counterparts.
Though returns across bond markets were subdued relative to equity markets, they were still positive providing a good ballast to portfolios. Government bonds (Gilts and US Treasuries) both generated gains on the view that the BoE and Fed are likely to cut rates into the New Year. Credit strategies also posted gains as corporate profits and balance sheets remain robust.
Within alternatives, infrastructure and real estate performed reasonably well over the year providing mid to high single digit returns. Precious metals had a particularly strong run in 2025 with physical gold prices rallying over 50% in 2025. This was based on several factors, including investors seeking a safe haven amid geopolitical uncertainty, Central Bank purchases as part of a broader diversification strategy, as well as weakness in the US dollar.
2025 was an exceptionally strong year for risk assets and regional diversification was much more beneficial than we have seen in recent years. Also, maintaining exposure to high quality, low duration credit managers has helped deliver consistent and less volatile return streams through the year. Whilst these continue to be attractive themes, we will, as ever, be on the lookout for new investment opportunities as they arise in 2026.
Please note:
For regulated financial advisers and investment professionals only. Copia does not provide financial advice, and the contents of this document should not be taken as such. The value of investments can increase and decrease, past performance and historical data cannot guarantee future success, and any references to individual stocks or asset classes are made purely for illustrative purposes.
The performance of each asset class is represented by certain Exchange Traded Funds and Passive Funds available to UK investors and expressed in GBP terms selected by Copia Capital Management to represent that asset class, as reported at last UK market close before the end of the calendar month. Reference to a particular asset class does not represent a recommendation to seek exposure to that asset class. This information is included for comparison purposes for the period stated but is not an indicator of potential maximum loss for other periods or in the future.