March 2025 Market Commentary
- Belvedere Wealth Management
- Apr 13
- 3 min read
Cash remains king: Dividend Growers might give us the resilience we need
In the words of Warren Buffett, ‘Risk comes from not knowing what you’re doing.’ In March 2025, global markets underscored the importance of informed diversification.
Last month proved a turbulent month for global equities, with the MSCI World Index declining, reflecting broad-based pressures across developed markets.
The S&P 500 mirrored this weakness, as U.S.-specific issues like trade policy uncertainty compounded global headwinds. Emerging markets, however, showed relative resilience, with the MSCI Emerging Markets Index posting a modest gain, led by China and India.
This commentary explores these dynamics and offers portfolio insights to navigate an increasingly uncertain landscape.
The MSCI World Index fell by -4.40%, signalling widespread challenges across developed markets. The S&P 500’s steeper decline of -5.63% highlighted U.S.-specific pressures tied to looming trade policy shifts and rising inflation fears. In contrast, the MSCI Emerging Markets Index rose 0.67%, driven by gains in key Asian markets like China and India. This divergence underscores the uneven impact of global economic crosswinds, with emerging markets offering a rare bright spot amid a risk-off sentiment.
Developed Markets Performance
Executive Summary
Developed markets faced a tough March 2025, with the MSCI World Index plunging, driven by declines across major regions. The S&P 500’s 5.63% fall reflected heightened U.S. challenges, while Europe and Asia also saw losses, though some markets like Japan were less affected. The MSCI World Index’s top constituents- Apple (4.91%), Nvidia (3.90%), and Microsoft (3.89%) contributed to the downturn, as tech stocks faced pressures from rising interest rate fears and tariff uncertainties.
Market Summary
The MSCI World Index’s -4.40% decline as of 31st March 2025 reflects a broad sell-off in developed markets, with its year-to-date performance now at -1.68%. In the U.S., the S&P 500 fell 5.63%, exacerbated by trade policy uncertainty following tariff announcements that heightened inflation risks. Tech-heavy sectors, aligned with the MSCI World Index’s top constituents (e.g., Apple, Nvidia, Microsoft), drove losses as rising interest rate fears and global demand concerns weighed on valuations. The U.S. economy showed signs of a steady slowdown, with growth projected to gradually decelerate to 2.0% over the coming quarters, adding to investor caution.
Europe also struggled, with Germany’s DAX down -3.80%, reflecting global risk-off sentiment despite recent fiscal stimulus. The UK’s FTSE 100 declined by -2.50%, pressured by falling commodity prices, while Japan’s Nikkei 225 saw a smaller drop of -1.90%, cushioned by a weaker yen supporting exporters. These regional declines contributed to the MSCI World Index’s overall loss, highlighting the need for defensive strategies in a volatile environment.
Emerging Markets Performance
Executive Summary
The MSCI Emerging Markets Index rose 0.67% in March 2025, a rare positive note amid global equity declines. Gains in China and India offset weaknesses elsewhere, highlighting the asset class’s resilience in a challenging global environment.
Forward Outlook: Portfolio Considerations
The decline of global equities in the first quarter of this year highlights the need for cautious diversification amid a bumpy economic landing. The MSCI World Index’s -4.40% drop reflects heightened risks from policy uncertainty and inflation, tariffs could add 0.3% to 1.0% to core inflation.
In this climate, investors should prioritise defensive assets, focusing on quality and income-generating assets such as dividend growers with robust cash flows. This will provide the resilience needed in portfolios at these uncertain times.
Emerging markets, with a 0.67% gain, offer selective opportunities. China and India remain attractive for growth, supported by fiscal stimulus and domestic demand. Real assets like infrastructure and real estate provide stability; infrastructure benefits from inelastic demand, while real estate sees a rebound with rising demand in industrial and alternative sectors.
Municipal bonds also stand out for their solid credit fundamentals and attractive yields, especially in longer-duration segments. In equities, U.S. small caps could see tailwinds from lower corporate taxes and protectionist policies despite recent underperformance.
Discuss how to safeguard your finances in uncertain times with a financial adviser.
Disclaimer:
The commentary you find on this page is for information only; it is not intended as research or a recommendation suitable to your circumstance. Please seek financial advice from a professional before acting on investment decisions.
As is the very nature of investing, there are inherent risks, and the value of your investments will both rise and fall over time. Please do not assume that past performance will repeat itself and you must be comfortable in the knowledge that you may receive less than you originally invested.
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