Who made money in 2025?

2025 was a good year for equity investors. After a sell-off on President Donald Trump’s announcement of tariffs in April, global equities returned 22% last year, notching up their third consecutive year of double-digit gains. An investor who bought the global market in late 2019 would have achieved a return of 89% over the last six years.

Investors are used to US equities doing well. But last year they underperformed the rest of the world for only the fourth time in the last 15 years, with the US returning 17% against a return of 29% from the rest of the world. This marks a break with the post-pandemic story of significant US outperformance. How can we explain this reversal of fortune?

In the wake of the pandemic the ‘magnificent seven’ tech stocks (Nvidia, Meta, Alphabet, Tesla, Microsoft, Amazon and Apple) shot ahead of the broad US and global equity markets. Since then worries about tech valuations and uncertainties about returns to AI investment have grown while some investors have shifted away from tech stocks. Last year five of the magnificent seven underperformed the broad market.

This is not to say the tech story is dead. Within the magnificent seven Alphabet (owner of Google) and Nvidia saw strong gains. Alphabet’s AI models dominate a popular online performance leaderboard and Nvidia has benefitted from strong demand for its AI chips. Some of the best-performing stocks are smaller tech companies, including Western Digital, Micron Technologies and Seagate Technologies, which make the memory and computer storage needed to build data centres. Sandisk, another player in the sector, has risen almost tenfold in value since spinning out of Western Digital last February.

Euro area equities did well, yielding 39%, led by a strong performance from so-called peripheral Europe - Greece, Spain, Italy and Ireland.

Emerging market performance of 17.4% was dragged down by weakness in the largest equity market, India, which returned 8%, but bolstered by a 36% rise in the Chinese market.

Globally mining companies specialising in precious metals were the best performing sector. In the UK the best-performing stock in the FTSE 100 last year was Fresnillo, which mines silver and gold in Mexico and delivered returns of 468%. Silver and gold prices have risen, buoyed by concerns about levels of government debt and inflation.

Defence and aerospace stocks have continued to benefit from geopolitical uncertainty and rising levels of defence spending, with the global sector yielding 54% last year. UK defence contractor Babcock returned 150% and aerospace giant Rolls-Royce yielded 105%.

Bank shares underperformed from the financial crisis in 2007 until late 2023, since when they have soared in value, especially in Europe. Last year banks globally returned 43%, buoyed by strong profits and low default rates. In September of last year, after a strong two-year rally, the Datastream global bank index finally broke through the peak it last reached on the eve of the financial crisis in May 2007.

And the underperformers in this rising market? Retail, leisure and consumer products companies have tended to underperform against a backdrop of lacklustre consumer demand and rising tariffs.

House price inflation lagged returns on equities across the US, the euro area and the UK last year. Figures from Halifax show that UK house prices rose just 0.3% in the year to December. More granular official data points to mid-single digit price growth in the Northeast and Northern Ireland in the year to October, but with London house prices down 2.4%. Central London has been hard hit, with prices in the City of London, Westminster and Kensington and Chelsea down 16%-18% in the year to October. Housing isn’t the investment it once was. UK house prices have risen 5.5% in the last three years compared to inflation of 10% and a return on the FTSE 100 of 49%.

Two more exotic asset classes have also struggled. The Liv-ex Fine Wine 1000 index is down 4.5% over the past year, its third year of decline, while classic car prices rose by 1.3%.

Despite myriad risks and uncertainties 2025 delivered bumper returns for equity investors. The macro picture was mixed, but sector-specific factors propelled many stocks higher. A rising tide, however, did not lift all boats. 20 of the FTSE 100 delivered negative returns last year. More generally, it is worth noting that share prices can fall and languish for very long periods leaving index performance dependent on a handful of high performers. Research by Hendrik Bessembinder of Arizona State University, which the Economist cited last month, found that between 1925 and 2023 most listed US firms delivered negative returns. Remarkably, less than 3% of stocks accounted for all the increase in shareholder wealth over this period.