What we saw: The first six months of 2025 told a story of market resilience and recalibration on several fronts. After a bumpy start to the year, marked by steep equity declines early in the second quarter, most market sectors and indices rebounded and, in many cases, surged to new highs by June 30.  

Domestically, the S&P 500 staged a dramatic comeback, closing June at an all-time high. The broader domestic equity market, represented by the Russell 3000, gained 11% in the second quarter alone. Small-cap stocks, which lagged earlier in 2025, posted a solid 8.5% quarterly gain. The tech sector was particularly strong once again, propelling the Nasdaq 100 to record levels.  

Perhaps the biggest headline from the first two quarters of 2025 was international equities outperforming their U.S. counterparts. Developed and emerging markets, buoyed by political and currency stabilization, outpaced U.S. equity gains. A key tailwind for international investors has been the weakening U.S. dollar. As the dollar hovers around near multi-year lows, returns on foreign investments were amplified by currency translation gains. This shift marks a notable reversal from the past decade, during which a strong dollar consistently favored U.S. assets. 

On the fixed income front, bond markets stabilized a bit. The U.S. Aggregate Bond Index rose 1.5% in June, with long-term Treasuries and corporate bonds benefiting from falling yields and narrowing credit spreads. Narrowing credit spreads in government and corporate fixed income tend to convey less perceived risk in the fixed income markets. Even high-yield and emerging market debt saw improved sentiment, as investors demonstrated an increased appetite for riskier assets.  

Despite recent run-ups and renewed optimism, the overall outlook remains obscured. The potential for continued and additional tariffs continues to loom large. While negotiations are ongoing, renewed trade tensions will inject uncertainty into the markets. The sweeping fiscal and tax package (the “Big Beautiful Bill”) just passed by Congress is likely to reshape tax policy, government spending, and inflation expectations in the immediate and long term.  

The Federal Reserve has so far held rates steady. However, the Fed is widely expected to cut rates up to three times before year-end while trying balance taming inflation pressures and responding to signs of a softening labor market, including rising unemployment claims and slowing job creation.  

Performance of NCCF investment managers: NCCF managers experienced solid gains for the quarter in the range of 6 to 8%. Returns were positive over the long term, with most managers averaging double-digit positive returns at the one- and three-year intervals. Longer term returns at the five- and 10-year intervals are in line with benchmarks and the broader goal to support endowment spending. 

The first half of 2025 demonstrated that markets can recover swiftly while remaining sensitive to policy shifts and global developments. In this environment, investors are reminded of the importance of diversification and patience, and the difficulty of trying to achieve returns through market timing. While volatility is likely to persist as policy decisions and other macro forces are poised to drive market uncertainty, creating diversified portfolios across asset classes and geographies with a long-term approach remains a prudent investment strategy.  

More 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	10.7%	10.7%	8.8%	6.5%	7.7%
Benchmark – Diversified	11.8%	10.7%	9.0%	7.2%	7.9%
Long Term Growth Pool	13.1%	14.1%	11.1%	8.5%	9.4%
Benchmark – Blended	12.1%	12.2%	9.3%	8.1%	9.3%
All Managers (Net Weighted)	11.7%	11.6%	9.3%	7.2%	8.3%
Benchmark – Broad	13.2%	12.8%	9.3%	7.7%	8.3%
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.