Nine Months In – And Markets Haven’t Behaved as Expected
As we enter the final quarter of 2025, investment performance may not resemble what many investors had anticipated at the start of the year.
While global markets continue to generate headlines, their underlying returns — once currency movements are taken into account — tell a very different story.
A Simpler Challenge Than FT Alphaville’s Friday Quiz
Understanding the Chart and What It Represents
The Financial Times’ FT Alphaville blog is famous for its weekly challenge featuring obscure price charts — often an Argentinian bond or distressed corporate debt.
By contrast, the graph in question here is much more straightforward. It tracks the performance of three well-known exchange traded funds (ETFs) over the first nine months of 2025:
-
A gold ETF
-
A FTSE 100 ETF (with dividends reinvested)
-
An S&P 500 ETF (also with dividends reinvested)
To ensure a level playing field, each ETF:
-
Comes from the same provider
-
Is priced in US dollars
-
Has been rebased to 100 at 31 December 2024
Your task: identify which line matches which investment.
The Results: Gold Takes a Clear Lead
Which ETF Performed Best?
The outcomes may surprise even seasoned investors. By the end of the third quarter of 2025:
-
Gold ETF: +47.0% (top performer)
-
FTSE 100 ETF: +18.9% (second place)
-
S&P 500 ETF: +13.1% (bottom of the trio)
The notion that the S&P 500 — the index hitting regular all-time highs — would lag behind both gold and the FTSE 100 is unexpected for many.
Why Did This Happen? One Word: Dollar
A Weakening US Currency Has Shifted the Landscape
Despite the apparent strength of US equities, the story looks different when measured in dollars or from the perspective of overseas investors.
Several forces have contributed to pressure on the US dollar throughout 2025:
Unpredictable Tariff Announcements
Tariffs of 25% or more have been introduced with little warning, often following weekend posts on Truth Social. This unpredictability has unsettled global investors and encouraged selling of the dollar.
Currency Hedging by International Investors
Foreign owners of US equities have increasingly hedged their exposure to the weakening dollar, reducing the uplift from rising share prices.
Central Banks Rebalancing Reserves
Many central banks have cooled on the dollar and increased their interest in — and purchases of — gold, supporting gold’s outperformance.
The Lesson for Investors: Currencies Still Matter
Strong Markets Don’t Always Mean Strong Returns
For private investors, this period reinforces a fundamental principle: currency movements play a critical role in investment returns.
Even when US equities hit new highs, the declining value of the dollar has diluted those gains for non-US investors.
Investment Risk Reminder
Investing in shares should be regarded as a long-term commitment and should align with your financial circumstances and appetite for risk.
The value of investments — and the income from them — can fall as well as rise, and you may not get back the amount originally invested.
Speak to Chartwell Wealth Management
If the performance of different markets and currencies in 2025 has raised questions about your portfolio, we’re here to help.
Chartwell Wealth Management can provide clear guidance on diversification, currency exposure, and long-term investment planning.
Contact us today to review your strategy and ensure your investments remain aligned with your goals.
