Increased volatility giving rise to diversification opportunities

Only one word springs to mind when thinking about the first half of this year: volatility. 

From swings in sentiment around artificial intelligence (AI) stocks to U.S. policy jitters and tariff talk, the year so far has reminded us just how important diversification can be.

While global equity markets overall are only slightly positive at the end of June, the performance gap between regions has been significant. European and UK equities have led the way, with the IA Europe ex UK sector up 12.42% and UK All Companies delivering 7.35%*. UK Smaller Companies also made a comeback, rising 4.31%*. Meanwhile, the U.S. equity market has struggled, with the IA North America sector down 4.06% — and its smaller company peers hit even harder, falling 10.79%*.

At first glance, this may seem surprising. The U.S. economy remains resilient, and company fundamentals still look healthy. But market sentiment has been the biggest driver this year for equity markets. Concerns over trade policy and stretched valuations in the technology sector have fuelled investor nerves. 

Elsewhere, Latin America has quietly delivered the strongest regional performance, with the IA Latin America sector up an impressive 17.25%*. European smaller companies also stood out, up 14.49%*, while the healthcare sector and Indian equities lagged. We discussed some of these trends, and what they could mean for investors in the UK, in greater detail on the Investing on the go podcast.

Looking ahead…

With so much uncertainty still on the horizon, we continue to argue for a balanced portfolio approach. Diversification is your friend in these types of markets. Despite the choppiness, we remain constructive: volatility often brings opportunity, and we see dispersion between winners and losers as a chance for active investors to shine.

Europe continues to show signs of strength, and we’re optimistic about its potential in the second half of the year. That said, a selective approach is key. Not every company or sector will benefit equally, and geopolitical tensions and economic data surprises could easily shift the narrative again.

The road ahead may remain bumpy but with the right mix of resilience and long-term thinking, there are still plenty of opportunities to be found.

Precious metals shine

Gold prices have continued to surge in 2025, fuelled by trade tensions, geopolitical risks, and a shifting landscape for traditional safe havens. The price of gold peaked at $3,500/oz in April, up nearly 30% year to date, with analysts at J.P. Morgan now forecasting a potential move towards $4,000/oz by the second quarter of 2026**.

This backdrop has been a major tailwind for specialist funds. The Jupiter Gold & Silver fund leads the pack so far this year, returning over 47%, followed closely by Ninety One Global Gold and WS Amati Strategic Metals.

In a recent episode of our Investing on the go podcast, Jupiter’s Ned Naylor-Leyland explains the evolving role of precious metals in modern portfolios. He also discusses the performance gap between physical assets and mining equities, makes a bullish case for silver, and explores why U.S. Treasuries may be losing their status as the go-to safe haven.

Best-performing Elite Rated funds 

*Source: FE Analytics, total returns in sterling, discrete calendar year, 29 June 2025

**Source: JPMorgan, 10 June 2025