Market commentary: Sep 2025
Investment news and performance
Our portfolio returns are following a consistent pattern over the last year, 6 months, and even the last 2 months. Returns are positive in all areas (shares, infrastructure, fixed interest). International shares are consistently the stand-out performer.
Average annual returns for our client portfolios for the year to 30 September range from 9.50% for Growth, 6.40% for Balanced, and 4.50% for Conservative portfolios. This illustrates the impact of high returns on international shares with Growth portfolios benefitting the most as they have the highest allocation.
Expectations for growth in companies associated with Artificial Intelligence (AI) remain high. This is reflected in increased share prices of these so called ‘Magnificent 7’ over the last year.
The table below shows the annual return on the shares of each of these companies which we find surprising given what’s going on in the world.
| Magnificent 7 Companies | Annual return |
|---|---|
| Microsoft | 20% |
| Nvidia | 54% |
| 46% | |
| Amazon | 18% |
| Netflix | 69% |
| Apple | 9% |
| Tesla | 70% |
A staggering fact is the combined market value of these 7 companies which has ballooned to a whopping US$16,000,000,000,000
(US$16 Trillion!). This is 34% of the total US share market as measured by the S&P500. Investors are justifying these elevated prices as they expect enormous growth as AI capability advances.
So, it’s easy to see what is driving the US share market. It’s great for portfolio returns as our managers hold shares in all these companies, but we are cautious about the medium-term direction of the market and are constantly pondering when it may reach a peak. We’ve maintained the same asset allocation to shares since July last year when we reduced the allocation by 2%.
It was tempting to sell shares in April when Donald Trump announced the ‘Liberation day’ tariffs. Fortunately, we didn’t as the market quickly bounced back to record highs. Since then - and against predictions - the data shows increased levels of optimism. At some stage this will change to pessimism and when this trend appears we will reduce investment in shares by a further 2%. Meanwhile our fund managers are adjusting their portfolios to a more defensive mix of companies with less investment in Information Technology and more in defensive areas like Consumer and Financials.
The path ahead for share markets remains uncertain as tariffs, trade wars, and real wars are upending the global economy but opportunities are emerging. Multi-national companies, electricity utilities, industrial, and defence companies are expected to benefit from several developing tailwinds. One of these being the announcement of large spending packages by Governments in Europe for defence and infrastructure upgrades which will have positive ramifications for many companies.
Richard Grimes, CERTIFIED FINANCIAL PLANNER (CFPCM), Director and Financial Adviser