By Tim Courtney, Chief Investment Officer
Despite all the noise this year around tariffs, wars, inflation and more, markets to date have moved very little. Take a look at large-cap U.S. stocks, REITs and bonds, which are all up between 1% and 3% through mid-June.1, 2
There are a few exceptions. Gold is up about 28% year-to-date,3 and international stocks are up as well, with returns between 12% and 20% year-to-date.4 These returns are due in large part to a weaker U.S. dollar (down about 9%5).
So, outside of dollar weakness causing some higher returns in a few assets, most of the market is not too far away from where we started 2025. This might be surprising considering how loud the news has been this year and how volatile markets were in April when the CBOE Volatility Index (VIX) shot up to 70 before falling back down.7 Investors hadn’t seen levels that high since the peak of COVID in 2020.
What we’re seeing now is a shift from the unusually calm conditions of 2023 and 2024 to something more typical: noise and uncertainty. We can get used to how things have been for some time and forget how things were before. Similar to how we got used to low inflation between 2008 and 2020, only to be reminded that we’ve gone through several damaging bouts of inflation over the last 50 years.8 Many investors had forgotten that unpredictable volatility spikes are the norm.
Uncertainty is the cost of admission to generate real returns. We often say that we get paid our returns when the environment is calmer, but we earn them in times when volatility is high, like in April this year. Much of the volatility this year has been because of policy uncertainty, and as investors, we would always prefer more policy certainty. But if it is not policy changes causing volatility it is usually something else, like inflation, or debt defaults, or concern about valuations, or any number of other things. The point is that these uncertain outcomes create natural volatility, and this volatility is ultimately responsible for our returns.
Capturing these returns takes discipline. As prices swung around in April, trading based on an unknowable policy outcome was speculation at best. Maintaining a disciplined process and making decisions based on what we know (prices) rather than on what we don’t know (outcomes) has allowed investors to more reliably capture returns over time. If you have any questions, please reach out to your Exencial advisor.
Sources:
- S&P Global (data as of 6/19/25) – S&P 500 Index, United States REIT Index
- S&P Global (data as of 6/19/25) – Bond Index
- Yahoo! Finance (data as of 6/19/25) – SPDR Gold Shares (GLD)
- Yahoo! Finance (data as of 6/19/25) – BNY Mellon International Equity ETF (BKIE)
- MarketWatch (data as of 6/19/25) – U.S. Dollar Index (DXY)
- Yahoo! Finance (data as of 6/19/25) – Russell 2000 Index (RUT)
- Bloomberg (4/4/25) – VIX Closes at Highest Since 2020 as Stock Slide Accelerates
- Investopedia (2/2/25) – Historical U.S. Inflation Rate by Year: 1929 to 2025
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Created by the Chicago Board Options Exchange (CBOE), the Volatility Index, or VIX, is a real-time market index that represents the market's expectation of 30-day forward-looking volatility. Derived from the price inputs of the S&P 500 index options, it provides a measure of market risk and investors' sentiments.
