Q4 2025 HIGHLIGHTS
The Nasdaq-100 Index® (NDX®) gained 2.3% in Q4 2025, the S&P 500 rose 2.7%, the MSCI EAFE advanced 4.9%, and the MSCI EM climbed 4.8%. Compelling valuations propelled European and Japanese markets ahead of the U.S. – the STOXX Europe 600 rallied 6.5% and the TOPIX surged 8.8%.
Monetary policy was a central theme. The U.S. Fed delivered two rate cuts, ultimately bringing the federal funds target rate to 3.5% - 3.75%, and the Bank of England followed with a single reduction. The European Central Bank and People's Bank of China held rates steady, maintaining the status quo that had been in place in Q3. The Bank of Japan, however, raised rates to 0.75% in December – their highest level in 30 years. The U.S. 2y10y spread widened as the 10-year Treasury yield finished the quarter essentially unchanged while the 2-year declined. The ICE U.S. Dollar Index posted a modest gain of +0.6%, following a +0.9% prior quarter increase – a welcome stabilization after the -10.7% slide in H1 2025.
Over the course of Q4 2025, option adjusted spreads on investment grade corporates were largely unchanged (+2 bps for the ICE BofA Global Corporate Index and +3 bps for the ICE BofA U.S. Corporate Index), and a comparable picture emerged in the below-IG space (+6 bps for the ICE BofA Global High Yield Index and +5 bps for the ICE BofA U.S. Floating Rate High Yield Index).
Institutional asset owners directed a net +$54.6 billion into fixed income strategies in Q4 2025, at time of writing. Sizable net inflows went to actively managed U.S. core and U.S. core plus products, while U.S. high yield and U.S. corporate fixed income strategies experienced net outflows. The four equity universes attracting the largest net inflows were all passive, while the four equity universes with the greatest net outflows were active. EAFE passive equity, U.S. small cap core equity, and listed infrastructure equity universes emerged as the leading positively trending categories in Q4 2025.
And in the fourth quarter, 42 of the 100 most important Nasdaq eVestment universes posted win-rate improvements relative to their prior four-quarter averages – a decline from 46 in Q3. These 42 universes accounted for 26% of total reported institutional AUM and the top 100 universes collectively represented 82% of the total.
Notable standouts with win-rate improvements include EAFE passive equity (+20.7 points) and Japan all cap value equity (+17.3 points). On the other end of the spectrum, ACWI ex-U.S. passive equity (-20.4 points) and global EM all cap value equity (-16.5 points) saw the steepest win-rate declines.
