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WealthSelect Managed Blend monthly commentary - Review of August 2025

Date: 09 September 2025

UK: Suitable for retail and professional clients.

4 minute read

In order to aid your understanding, the underlined terms are hyperlinked to definitions in our online investment glossary.

Our market summary

August was broadly positive for global markets with global equities up 2.0% in US dollar terms. However, the strength of the pound against the dollar saw this reduce to 0.4% for sterling-based investors. Investor sentiment was supported by strong corporate earnings alongside a more dovish stance from the US Federal Reserve (the Fed) in the face of weakening US labour market data. Trade tensions also eased slightly, with the US extending tariff pauses with China and reaching agreements with other countries. Elsewhere, equity valuations are still elevated, especially in the US, suggesting limited room for disappointment. Therefore, diversification across regions and asset classes remains key to managing risks from inflation and trade-related slowdowns.

US equities were also up by 2.0% in US dollar terms, driven by strong Q2 earnings and expectations of Fed rate cuts. However, this equated to a loss of 0.1% for sterling-based investors due to the weakness of the dollar. Alongside positive earnings, business surveys improved. Materials and healthcare outperformed, while technology lagged due to concerns over measurable financial returns from AI implementation.

European equities saw small gains and ended the month up by 1.2%. Returns were driven by strong economic data, which showed a pick-up in business activity and signs of economic expansion. Energy and consumer discretionary sectors led the way, while IT and industrials underperformed. French political uncertainty weighed on European equity returns, with the main French index down following the announcement of a no confidence vote in the government.

UK equities gained 1.1%, supported by energy, telecoms, and basic materials. Technology declined, mirroring global trends. Inflation rose to 3.8% prompting increased caution from the Bank of England around the pace of future rate cuts, after cutting its policy rate by 25 basis points. There were further signs of internal dissent (four members of the Monetary Policy Committee voted for no change) with signs of a weakening UK jobs market complicating the backdrop.

Emerging market equity returns were again affected by the weaker US dollar, with a 1.6% gain in US dollar terms equating to a 0.6% loss for sterling-based investors. Returns were driven by Latin America and China. Brazil shrugged off US tariffs, supported by currency strength and easing inflation, while China, up 2.8%, benefited from extended tariff pauses and chip supply expansion plans. Taiwan and Korea underperformed due to tech weakness and tax concerns.

Fixed income markets were mixed in August. US Treasuries gained 1.0%, driven by Fed rate cut expectations and weaker labour data, and the yield curve steepened amid concerns over the independence of the Fed. In the UK, gilts were down 1.1% with inflation surprises and fiscal worries pushing yields higher. Meanwhile, global corporate bonds, up 0.7%, outperformed global government bonds (up 0.3%), supported by strong earnings and tightening spreads.

Performance review

Equity markets continued their upward trajectory over the month as corporate earnings reports beat analysts’ muted expectations, and the Fed held open the prospect of a September rate cut. Japanese equities were the standout performer over the month and despite healthy returns from the US, dollar weakness dampened returns for sterling-based investors.

Against this backdrop, portfolio returns ranged from 0.5% for the Managed Blend 3 Portfolio to 0.7% for Managed Blend 10.

The performance figures shown refer to past performance. Past performance is not a reliable indicator of future performance. The value of investments and the income they produce can fall as well as rise. You may get back less than you invested.

Investment outlook

The summer months have done little to calm the volatility that has defined markets in 2025. Despite persistent geopolitical tensions and a sweeping overhaul of US trade policy, equity markets have continued to climb.  

Tariffs posing headwinds  

August saw the full activation of the US administration’s new tariff regime, with country-specific duties now applied to over 70 trading partners. The average US tariff rate has surged to over 18%, the highest since the 1930s. We remain concerned as to who will pay for this and note signs that the impact is starting to show through in producer price inflation. This could pose headwinds to corporate earnings, broader inflationary pressures, and the expected path of interest rates to the end of the year.  

Geopolitical tensions remain elevated  

At the same time, geopolitical tensions remain elevated. This has added to investor caution, particularly as political interference in US central bank policy raises concerns about monetary independence.

Focused on diversification 

Despite this, equity markets have remained buoyant. However, our enthusiasm remains tempered by the disconnect between valuations and the underlying risks. We continue to monitor economic data and policy developments closely, and have focused recent activity on profit taking, leaning into areas of weakness as well as ensuring the portfolios remain well diversified.

Stuart Clark

Portfolio Manager

Helen Bradshaw

Portfolio Manager

Bethan Dixon

Portfolio Manager

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