Market & Investment Risk Insights (Global Equities)

2025 was arguably the most geopolitically consequential year since the fall of the Berlin Wall in 1989. Yet, it now feels like it may have been only a dress rehearsal for what is coming in 2026. At the same time, equity markets seemed to remain immune from the turmoil. The US was mainly focused on the AI trade and potential rate cuts (with the exception of the period surrounding “Liberation Day”) and non-US markets were driven by more favorable interest rate environments, trade wars and a weaker dollar, and a renewed focus on defense.

Volatility remained unusually low, which at least for the short term meant that investors felt they could invest without the prospect of losing tomorrow what they put in today. With some exceptions, such as a strong preference for high volatility for most of the year, Axioma model style factors behaved as expected, although a few produced returns larger in magnitude than risk predictions suggested.

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1. Geopolitics and Macroeconomics (number of minutes)
2. The Risk Environment (number of minutes)
3. Factor Performance (number of minutes)
4. Spotlight on Europe (number of minutes)