Diversified investors experienced gains in 2025. As 2026 unfolds, investors are watching for signs of broader market participation and continued earnings growth beyond mega-cap tech.

2025 recap and 2026 outlook 

Diversified investors were rewarded in 2025. Most global equity indices experienced double digit gains led by enthusiasm for Artificial Intelligence and solid corporate earnings. Most US domestic indices provided positive returns for the third consecutive year, with the S&P 500 up 17.9%, the Dow Jones gaining 14.9%, and the Nasdaq advancing 21.1%. International stocks posted their best relative performance to US equities in over 30 years, supported by fiscal stimulus, a weakening dollar, and earnings growth abroad.  

Tariffs weighed on large swaths of the market, as early 2026 gains were concentrated in mega-cap tech stocks, but market leadership broadened later in the year. Markets cleared a wall of worry associated with the so-called tariff “Liberation Day” in the second quarter, transitioning to a broad-based rally: gold, emerging markets, S&P 500, Euro Stoxx 50 and global bonds all surged – outperforming cash as higher short yields began to decrease.  

Despite volatility from political events and concerns of inflated equity valuations, nearly all major global equity markets produced positive returns for the year 2025. Falling inflation and Fed rate cuts led to the best bond market performance since 2020. Investment grade and high yield bonds rallied, with spreads narrowing as economic growth persisted. 

2025 drivers and themes 

• AI investment: Spending on AI infrastructure fueled earnings growth, especially in technology and communication services. The “Magnificent 7” stocks dominated early, but participation widened as the year progressed. 

• Federal Reserve policy: The Fed held rates steady until mid-year, then cut rates three times to support a softening labor market, boosting valuations and fueling a late-year rally. 

• International outperformance: International equities, notably emerging markets, outpaced US stocks with some regions delivering returns of over 30%. 

• Commodities: Precious metals surged, with silver returning 149% and gold topping $4,500 per ounce. Oil prices declined from early highs. 

• Geopolitical volatility: Events like the longest US government shutdown and new tariffs caused market swings, highlighting the value of diversification. 

Looking ahead to 2026 

Investors are watching for signs of broader market participation and continued earnings growth beyond mega-cap tech.  

The One Big Beautiful Bill Act (OBBBA) has potential to boost consumer spending through higher tax refunds, but job growth is expected to slow. Inflation remains above the Fed’s preferred target rate, tempering expectations for further rate cuts.  

The US dollar has significantly declined following a year of slower domestic growth, and political turmoil yet remains the anchor currency across the globe.  

While AI promises have taken a break from recent headlines, there is still long-term promise in the ongoing infrastructure build out underpinning that technology – semiconductors, data centers, and even classic infrastructure components like the electrical grid and network hardware.  

Despite macro headwinds, 2025 set the stage for potential momentum into 2026. The current environment with elevated valuations (potential AI bubble) and the increasingly polarized political environment is positioned to reward diversified investors. 

Performance of NCCF investment managers in the fourth quarter of 2025 

 NCCF managers experienced modest gains for the quarter in the range of 0.5-2.5%. Returns remain positive on a rolling longer term basis with most managers averaging double digit positive returns at the three-year interval. Returns at five-, 10- and 15-year intervals are in line with the broader goal of supporting endowment spending. 

Additional market commentary is available from NCCF’s investment advisor, Graystone Morgan Stanley. For investment information specific to your fund, please contact your Donor Engagement Officer or email support@nccommunityfoundation.org.      

	1-Year	3-Years	5-Years	10-Years	15-Years
Long Term Diversified Pool	12.9%	12.4%	6.3%	7.6%	7.0%
Benchmark – Diversified	16.1%	13.2%	7.3%	8.4%	7.4%
Long Term Growth Pool	17.4%	16.3%	8.7%	9.6%	9.0%
Benchmark – Blended	13.7%	14.1%	7.4%	9.0%	8.7%
All Managers (Net Weighted)	14.5%	13.7%	7.0%	8.3%	7.7%
Benchmark – Broad	17.7%	15.7%	7.7%	8.9%	7.7%
Benchmark – Broad: This benchmark represents a general approach to investment. 70% MSCI All Country World Equity Index , 30% Bloomberg Barclays Aggregate Bond Ind
Benchmark – Diversified: This benchmark represents a diversified approach to investment with material allocations to a combination of private equity, private debt, and alternative investments. 24% MSCI ACWI ex US, 20% S&P 500, 10% Russell 2500, 18% Bloomberg Barclays Aggregate Bond Index, 10% HFRI FOF index, 6% MSCI Infrastructure, 6% Cambridge Private Equity, 4% Barclay CTA, 2% Cambridge Private Debt
Benchmark – Blended: This benchmark represents a diversified approach to investment in public markets. 35% R1000, 15% Russell Midcap, 5% R2000, 10% MSCI EAFE Net, 30% Barclays Govt/Credit Bond, 5% FTSE Treasury Bill 3 Month.