Asset Class Performance: February 2025 Market Insights

Investors continue to navigate a dynamic global financial landscape, with interest rate shifts, economic uncertainty, and historical market trends shaping portfolio decisions. The Mercer Asset Class Performance Report – February 2025 provides a deep dive into market performance over the past decade and beyond, analyzing key events that have impacted asset growth.

Long-Term Market Trends and Asset Class Performance

Looking at 10-year and 30-year market performance, several key patterns emerge:

1. A Decade of Volatility and Resilience (2015–2025)

Over the past 10 years, financial markets have faced multiple global shocks, including:

• U.S. Trade War & Interest Rate Hikes

• COVID-19 Pandemic & Variants (Delta & Omicron)

• Russia-Ukraine War & Inflation Fears

• Silicon Valley Bank (SVB) Collapse & Banking Crisis

• Federal Reserve Rate Cuts

Despite these challenges, major asset classes have continued to grow, with notable performances in equities, bonds, and real assets.

2. 30-Year Performance: The Bigger Picture (1995–2025)

When examining a 30-year horizon, market resilience is even more evident. Historical events such as:

• The Dotcom Crash (2000)

• Global Financial Crisis (2008–2009)

• Brexit Vote (2016)

• Federal Reserve Rate Adjustments (2022–2025)

have all influenced asset class growth. Despite these disruptions, long-term investors who maintained diversified portfolios have seen substantial gains.

Asset Class Performance: What’s Leading?

Top Performing Asset Classes Over Time:

• Global Equities (S&P 500 & MSCI World ex Australia) – Long-term growth remains strong, despite short-term volatility.

• Australian Equities (S&P/ASX 300 Accumulation) – Resilient performance through economic cycles.

• Real Assets (Australian REITs & Global Listed Infrastructure) – Benefited from interest rate adjustments.

Lagging Asset Classes:

• Fixed Income (Bloomberg Global Aggregate Bonds) – Impacted by rising interest rates.

• Cash Investments (Bloomberg AusBond Bank Bill Index) – Low returns compared to equities.

Key Takeaways for Investors

• Long-Term Investing Pays Off – Despite short-term market volatility, historical data shows strong long-term growth across major asset classes.

• Diversification is Key – A well-balanced portfolio across equities, bonds, and real assets has helped investors navigate economic downturns.

• Monitor Interest Rates & Inflation Trends – Fixed income markets are highly sensitive to rate changes, requiring active portfolio management.

Final Thoughts

While past performance is not an indicator of future returns, the data shows that staying invested and maintaining a diversified portfolio is crucial for long-term financial success.

Source: Mercer Investments (2025, February). Asset Class Performance – February 2025. Mercer Investments (Australia) Limited.

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General Advice Warning:

The information on this website is intended to be general in nature and is not personal financial product advice. It does not take into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. In particular, you should seek independent financial advice and read the relevant product disclosure statement (PDS) or other offer document prior to making an investment decision in relation to a financial product.