Q4 2025 Market Review & Outlook — Update 1

Market Overview

Global equities finished the fourth quarter on a strong note, with the MSCI World Index gaining 4.2% during the period. The rally was broad-based, though notably led by European industrials and U.S. technology sectors.

Fixed income markets were more subdued. The Bloomberg Global Aggregate returned -0.8% as central banks maintained a cautious stance on rate cuts, pushing yields modestly higher across the curve.

Portfolio Positioning

We made several meaningful adjustments to the portfolio during the quarter:

• Increased allocation to European equities — valuations remain compelling relative to U.S. peers, with price-to-earnings multiples trading at a 30% discount
• Reduced duration exposure — we trimmed long-dated government bonds in favour of shorter-dated investment-grade credit
• Initiated a position in Asian infrastructure — driven by accelerating capex cycles across India and Southeast Asia

Looking Ahead

Heading into 2026, we remain cautiously optimistic. Corporate earnings growth appears sustainable at 6-8% globally, though we are mindful of several risks:

1. Geopolitical tensions in the Middle East continue to weigh on energy prices
2. China's property sector deleveraging is entering its fourth year with limited resolution
3. U.S. fiscal deficits remain elevated, which could pressure long-term yields

We believe the current environment favours active stock selection over passive index exposure. Dispersion across sectors is near decade highs, creating meaningful alpha opportunities for patient, fundamental investors.

We thank you for your continued trust and look forward to discussing our outlook in more detail at the upcoming investor call on January 22, 2026.