Private client portfolios recover as growth stocks drive Q2 rebound

Resilient investors were rewarded as private client portfolios bounced back in the second quarter of 2025, analysis from Asset Risk Consultants (ARC) has shown.

According to ARC’s latest figures, the average return of the ARC Sterling Steady Growth Index, which is based on the most common risk profile run by discretionary investment managers, rose by 3 per cent in Q2.

This has resulted in year-to-date performance of the index of 1.3 per cent, returning portfolios to positive territory in 2025 despite the volatility seen in April.

ARC said the rally was broad, with small-cap stocks performing similarly to large-cap stocks.

However, style was found to be an important factor, with growth stocks driving the recovery in the second quarter.

There were significant currency moves in Q2, ARC noted, with the dollar weakening amid rising concerns about US deficits and credit downgrades.

The US dollar fell by approximately 6 per cent against sterling, 9 per cent against the euro, and 11 per cent against the Swiss franc.

ARC said that the volatility in currency markets had a material impact on the performance of the ARC Wealth Indices.

“Despite a sharp sell-off following Trump’s ‘Liberation Day’ tariff announcements in early April, equity markets staged a strong recovery in Q2, shrugging off both trade and geopolitical concerns,” explained ARC Research managing director, Dan Hurdley.

“Boosted by strong earnings announcements from ‘big tech’, US equity markets outperformed and ended the quarter at record highs.”

The market recovery served as a “powerful reminder” of the potential risks when trying to time the markets, Hurdley said, and rewarded those who stayed invested during periods of volatility.

According to analysis from ARC, an investor missing the best 90 days within a global equity portfolio between 2001 and 2024, equating to just 1 per cent of days missed, would have reduced annualised returns in sterling by 11.7 percentage points.

“One of the difficulties in attempting to actively time markets is the contribution to equity returns that can occur in a single day,” Hurdley stated.

“Markets tend to go up gradually over the long term, but this trajectory is usually punctuated by some precipitous drops. These often occur during heightened volatility with many of the best days following poor ones.”



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