Q2 2025 Strategy Commentaries • Fixed Income & Convertibles
Fixed Income Franchise
Uncertainty reigned over risk assets in the second quarter. It began with President Trump’s announcement of a new tariff regime that sent equities tumbling, only to be followed by a tariffs reprieve that prompted a fierce “risk-on” rally. Fixed income markets also responded to this turn of events as investment grade credit spreads rallied to their tightest level in this cycle, while the Treasury curve steepened. Learn how Victory Income Investors views the fixed income markets in these uncertain times and how they are repositioning portfolios.
- Victory Income
- Victory High Income
- Victory Core Plus Fixed Income
- Victory Short-Term Fixed Income
- Victory Ultra Short-Term Fixed Income
- Victory Investment Grade Convertible Securities
- Victory Short Government
Fixed Income Franchise
At the start of the second quarter, the fear of widespread tariffs prompted investors to price in higher U.S. recession risk through lower bond yields, lower equity prices, wider credit spreads and a weaker U.S. dollar. But a pause in implementing these tariffs and the subsequent optimism for trade deals triggered a broad recovery across asset markets throughout the remainder of the second quarter of 2025. But are markets now underestimating the risks of another tariff surprise, potentially boosting volatility and increasing downside risks to economic activity? Get more fixed income insights from Pioneer Investments.
- Pioneer US Core Plus Fixed Income
- Pioneer US Investment Grade Corporate Credit
- Pioneer US Long Duration Credit
- Pioneer Global Corporate High Yield
- Pioneer Multi-Sector Fixed Income
- Pioneer US Bank Loans
- Pioneer US Multi-Asset Ultrashort Income
- Pioneer US Securitized Credit Opportunities
- Pioneer US Short Term Income
- Pioneer US Core Fixed Income
- Pioneer Multi-Asset Credit
- Pioneer US Agency MBS
- Pioneer US Agency MBS Short Duration
Q2 2025 Strategy Commentaries • U.S. and Non-U.S. Equity
U.S. and Global Equity Franchise
After an initial sharp pullback following the “Liberation Day” tariff announcement, markets rallied on three key developments: a pause in full tariff implementation, favorable inflation data and better-than-expected corporate earnings. Factor and style were key performance drivers in markets during the quarter, and high beta stocks led the advance, while lower beta shares notably underperformed. Although optimism ruled the day as the second quarter ended, we wonder if investors are ignoring the latent risks to the economy. Learn more and find out how Pioneer Investments is positioning portfolios in this environment.
- Pioneer US Large Cap Core
- Pioneer US Large Cap Growth
- Pioneer International Equity
- Pioneer Global Equity
- Pioneer US Mid Cap Growth Equity
- Pioneer US Dividend Equity
- Pioneer US Disciplined Value Equity
Global Equity Franchise
Global equities surged during the second quarter of 2025 despite uncertain U.S. trade policy and escalating conflicts in the Middle East. Emerging Markets outperformed Developed Markets slightly for the period, with the former continuing to benefit from U.S. dollar weakness. Asia/Pacific ex-Japan was the top performing region thanks to strong returns in Hong Kong and Australia, while the United Kingdom underperformed due in part to weakness in the Energy sector. So how is the second half shaping up for global equities? Learn more from the team at RS Global.
Value-Oriented Equity Franchise
The first half of the year has been nothing short of challenging. Tariffs, Department of Government Efficiency (DOGE) spending-cut noise, deficit concerns, wars, and interest rate volatility all created bouts of short-term heartburn. It is said that the market doesn’t like uncertainty, but you wouldn’t know that by looking at where equities ended the first half of 2025. Nevertheless, the path forward remains uncertain. Read what Integrity Asset Management sees as the key potential headwinds ahead as the team looks to the second half of the year.
- Integrity Micro-Cap Value
- Integrity Small-Cap Value
- Integrity Mid-Cap Value
- Integrity Small/Mid-Cap Value
Value-Oriented Equity Franchise
The second quarter capped off a roller coaster ride for investors during the first half of the year. After a steep sell-off following the April 2nd “Liberation Day” announcement, major U.S. indices recouped their losses and ended the quarter in positive territory. The S&P 500® Index posted a return of 10.9%, while the Nasdaq Composite returned approximately 18.0%. Thus, the market has once again managed to surprise investors in the second quarter. However, the coast may not be clear. Read why and get more insights from Sycamore Capital.
International Equity Franchise
International small-cap equities posted another solid quarter on improving sentiment as investors continue to diversify into the broader global economy, drawn by compelling valuations and strong underlying fundamentals. International returns were further supported by a 7% drop in the U.S. Dollar Index on weaker U.S. confidence following the announcement of widespread tariffs. For the quarter, the S&P® Developed Ex-U.S. SmallCap Index advanced 17.4% as all countries in the Index posted positive equity market returns. Read more about the outlook for small-cap international equities.
- Trivalent International Developed Equity
- Trivalent International Equity
- Trivalent International Small Cap
- Trivalent Emerging Markets Small Cap
Value-Oriented Equity Franchise
Who flipped the switch? The start of the second quarter looked bleak with a steady drumbeat of dismal news. The tariff-induced sell-off accelerated in early April, and there was much talk of inflation and recession. But almost just as quickly, markets bounced back smartly. The second quarter market favored the growth style and the Technology and Communications Services sectors in particular, but does this mean we are back to the days where the Magnificent Seven roar higher to the exclusion of all other attractive businesses? Not so fast. Read more on from the Value team at RS Investments.
Growth-Oriented Equity Franchise
The second quarter of 2025 was marked by extreme volatility, sentiment swings and uncertainty. The market spiraled lower during the first part of April, a continuation and acceleration of the tariff-induced sell-off that characterized the prior quarter. But virtually overnight, sentiment flipped and markets began a V-shaped recovery. The markets, and especially beaten-down growth stocks, moved off the worst-case scenario and staged a remarkable rebound. But even as recession fears may have abated for the moment, more episodes of volatility are likely. Read about the outlook for growth stocks from the RS Growth team.
Growth and Core Equity Franchise
The U.S. broad market indices bounced back during the second quarter as investor sentiment rebounded abruptly and equities surged higher. However, it is notable that there was significant dispersion among investment styles, with growth stocks outperforming value by a wide margin in the second quarter. Learn more about which sectors have been contributing and detracting from the performance of the Munder Capital Management strategies, and find out how the team is positioning portfolios for the second half of the year.
Macroeconomic Core Strategy Franchise
Amid easing uncertainty following the initial tariff shock, a rebound in AI-related Information Technology and Communication Services sectors led U.S. equity performance in the second quarter, along with Industrials and Consumer Discretionary. Other more economically sensitive sectors like Financials and Materials underperformed, as did late-phase defensive sectors like Health Care and Consumer Staples. But what’s in store for the second half of the year, and where are the most interesting opportunities? Get more insights from WestEnd Advisors.
Economic and Market Commentary
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This material has been prepared by Victory Capital Management Inc. The comments should not be construed as a recommendation of individual holdings or market sectors, but as an illustration of broader themes. This material is for information purposes only and should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security. There is no guarantee that the information supplied is accurate, complete, or timely, nor does Victory Capital make any warranties with regards to the results obtained from its use. Past performance is no guarantee of future results.
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