We hope you all had a great Christmas and New Year, and welcome to 2026!
2025 Returns
First let’s close off 2025 with our investment returns for the year which we have published here.
I think there was an expectation that Donald Trump would dominate the year in politics and he did not disappoint. Who can forget Liberation Day and those poor overtaxed penguins! Fortunately, things quickly cooled down, and markets recovered fast and furiously, but in markets it has not been all about the US. Despite the constant running narrative over artificial intelligence (AI) and its power to transform the world and business, dominated by US companies, it has been the rest of the worlds’ markets which have outperformed the US markets and the not so mighty (in 2025) dollar.
Step forward Asia, Emerging Markets, Europe and the UK, all giving superior returns, some by a long distance, to US equities. Tideway’s equity positions were positioned for this and, with a relatively stable bond market, our active managers did not disappoint.
Of course, we are not alone in delivering great outcomes last year, you would be very disappointed if your investments lost money in 2025.
Equities
- The average actively managed global equity investor made c12%.
- Passive investors in the global index did a little better at c14%.
- Tideway’s Blended Equity portfolio made just under c17% before our fees
- Tideway’s Global Equity Income portfolio made a whopping c26% before our fees, lifting the blended portfolio along the way.
Bonds
- In bonds the average actively managed investor in sterling corporate bonds made a nice 7%
- Passive index investors made a fraction less (we have always said it’s easier to beat the index in fixed income)
- Tideway’s Balanced Bond investors made just over 8%
Tideway’s High Yield Bond investors just over 9% in our balanced and high yield portfolios before our fees
If we make good returns in bonds and equities, our mixed asset portfolios largely take care of themselves and that was the case in 2025.
Yet again our net returns after all fees are broadly above benchmarks and above passive alternatives and in 2025 this applied to our equity investments as well as our bond investments. Tideway’s accounts at AJ Bell, account administration, portfolio management and all Tideway’s advice were effectively free, long may it continue!
Our model portfolios will be a decade old this September and, save any major hiccups in the next 9 months, we will be able to show that with our most popular Balanced Mixed Asset portfolio, this is something we have consistently delivered for a decade.
The 2026 Outlook
Most market analysis we read is positive for 2026, both for bond markets and equity markets; they generally always are! But clearly and as ever there are risks. Having had three great years of returns in a row we are fully focused in trying to avoid major losses whilst continuing to participate in markets which generally trend upwards.
Thanks to inflation, implicit investment market rewards and economic growth, there are generally more up years than down years, thank goodness!
The Risks
- Geopolitical risks are in plain view, and if you would like to see just what’s going on, our guest author, Stephen O’Sullivan, continues to exercise his mind and keep abreast of such matters and has written an excellent summary (much better than I could do!) of most of the risks. Read here. Suffice to say the year is off with a bang.
- There are risks to a recession, perhaps most acutely in the US where the economy has had a huge boost from AI infrastructure spend and the cost of living is hitting those without invested assets hard. At the same time, many UK investors are reviewing not just portfolio performance but also how their wealth is structured for the future, including inheritance tax planning strategies using offshore bonds as part of a broader financial plan.
- There are risks around overvaluation of some companies at the centre of the AI boom whether from a reported $100bn of circulating revenues, over enthusiasm as to the transformational impact of AI, or from competitive technology, some outside the US, think DeepSeek and Asian car manufacturers vs Tesla.
- There are risks around concentration in equity indices with the S&P 500 index and global equity indices more focused than ever on a small handful of mega cap companies, most of whom are fully involved in the AI boom.
- Finally, Nick and I were listening to Michael Burry at the end of last year, he of “The Big Short”, who highlighted the risks of the stampede into passive index investing reversing. Passive investing has been a massive success story, but when boiled down to investing simply on one criterion only, namely size, makes no logical sense. It has been clear what the impact of the rise of popularity has been as passive funds funnel money into the shares of the biggest companies, what happens if this goes into reverse?
I’m sure there are other risks out there which we and no one else for that matter have yet to think about. As the statement made popular by the ex-US defence secretary Donald Rumsfeld goes “it’s not the known unknowns”, these are manageable, “it’s the unknown unknowns” which require deep resilience.
Here below is how we think about the risks we do know about which we see as interrelated. It shows what their impact might be and what we are already doing about it.
We won’t be pushing the extremes on any of these issues, but they give you a good flavour of what we will be discussing at our upcoming investment committee meetings in 2026.
