Global markets are desynchronizing, with macro volatility and intervention from governments leading to diverging economic outcomes. Increased dispersion may facilitate more frequent rotation on market leaders, as these charts from Wellington's Solutions Group help illustrate, benefitting more dynamic and tactical investment processes, and improving the diversification benefit of global multi asset portfolios.

Over the past few years, the meteoric rise of US equities may have seemed impossible to surpass. While market leadership is dynamic over time, it was hard to identify the catalyst that would disrupt the status quo until the surprise of the tariff wars shocked markets and dethroned US equities. However, the dust has not settled on final tariff policies and such a scenario might not materialize long-term. Even if the world does not return to pre-tariff dynamics, current market leadership is not guaranteed.

While European equities are the current market leader, Japan equities have also had spells of top performance, encouraging after decades of stagnation, but recent results have been mixed. EM equities, previously weighed by a strong US dollar, have seen recent improved returns as the dollar has weakened. 2025 has signaled that the tides may be changing on US equity leadership, but there may not be enough evidence yet to make long-term portfolio changes.

Figure 1

Government bond returns have been challenged by inflation and more recently, debt sustainability concerns, but were strong relative performers in volatile periods like the pandemic. Meanwhile, sectors with credit risk like global high yield have led fixed income returns more recently. Entry point yields remain attractive and given starting yields are a significant determinant of future returns, credit could continue to be a compelling source of returns relative to equities.

Figure 2

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