Barometer: Analyzing Q4 portfolio trends

Advisors ended 2025 with portfolios that were more risk-aware yet still positioned for opportunity, tilting toward lower beta, reduced correlations and more deliberate style and sector choices. A weaker dollar, resilient local returns and shifting sentiment drove a meaningful rotation away from US equities toward developed international markets, particularly Europe and Asia‑Pacific, while emerging markets held steady despite strong gains. Within equities, enthusiasm for mid- and small-caps cooled as rate-cut expectations faded, even as large caps — especially technology — remained dominant amid efforts to manage mega-cap concentration and selectively increase Health Care exposure.

In fixed income, advisors modestly extended duration within a typical range and moved out of cash-like holdings into mortgage-backed securities and foreign government bonds, allowing bonds to deliver both stability and diversification as cross-asset correlations declined. Entering 2026, early outperformance from small cap, value and non-US stocks suggests the long-standing large cap growth leadership may be starting to give way to a broader opportunity set for diversified portfolios.