Q4 2025 Strategy Commentaries • Fixed Income & Convertibles
Fixed Income Franchise
Fixed income investors have been dealing with a host of contradictions. GDP surged to 4.3%, but inflation and unemployment remain elevated. Although fourth quarter fixed income returns were positive on the whole, the story beneath was more complex. The Treasury curve steepened as short-term yields declined in response to two more 25-bps rate cuts, yet long-term yields rose. Meanwhile, corporate credit spreads remained meaningfully below long-term averages for both investment grade and high yield rated debt in the fourth quarter. Read how Victory Income Investors is navigating these contradictions.
- 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
The U.S. economy proved remarkably resilient in 2025, weathering historic increases in import tariffs with surprising strength. Looking ahead, we believe the U.S. economy stands well-positioned thanks in part to the outlook for consumer spending, business investment, and easing financial conditions. During the fourth quarter of 2025, the Bloomberg US Treasury Index gained a modest, but positive, 0.90% return. However, it was notable that performance within the Treasury market was bifurcated, as intermediate Treasuries significantly outperformed long-term Treasuries as the yield curve steepened. Learn more about fixed income markets 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 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
Q4 2025 Strategy Commentaries • U.S. and Non-U.S. Equity
U.S. and Global Equity Franchise
U.S. equity markets closed the fourth quarter of 2025 with solid gains, extending a remarkable streak of positive momentum and delivering the third consecutive year of double-digit returns. Domestic large cap companies have continued to demonstrate strong profitability, and we think their structural advantages will allow them to trend higher throughout 2026. However, above-average valuations leave little margin for error, and we believe the probability of a correction at some point during 2026 is elevated. In that event, active equity managers may be in position to capitalize on opportunities as they emerge. Read more from Pioneer Investments on both U.S. and global equities.
- Pioneer US Large Cap Core
- Pioneer US Large Cap Growth
- Pioneer International Equity
- Pioneer Global Equity
- Pioneer US Dividend Equity
Global Equity Franchise
Global Equities continued their upward trajectory during the fourth quarter of 2025 thanks to a combination of easing trade tensions, solid corporate earnings and an expectation of lower interest rates in 2026. Emerging markets and non-U.S. developed markets both outperformed the U.S. during the fourth quarter and for the entire year. The financials sector helped drive gains in the United Kingdom and Europe, while Japan was also positive for the quarter on hopes the new coalition government would improve political stability. What’s the outlook ahead, and are higher quality companies poised to recapture investors’ interest? Learn more from the team at RS Global.
Value-Oriented Equity Franchise
Domestic equity markets continued to rally during the fourth quarter, and the story remains (broadly) the same. Around mid-year 2024, value characteristics began to underperform, and that trend continued during 2025. This past year was a momentum-driven market powered by retail investors and short-term investors that favored unprofitable companies, artificial intelligence (AI) associated companies, electricity producers, precious metals miners, bitcoin miners and biotechnology stocks. Nevertheless, we think we are starting to see some cracks in momentum’s armor, soaring capital expenditures (some financed by debt) and declining free-cash-flow margins are two red flags. We continue to believe the set-up for small caps and value strategies is improving. Read more from Integrity Asset Management.
- Integrity Micro-Cap Value
- Integrity Small-Cap Value
- Integrity Mid-Cap Value
- Integrity Small/Mid-Cap Value
Value-Oriented Equity Franchise
U.S. equities capped off another strong year for the major indices—the third consecutive year of double-digit returns for the S&P 500® Index, Russell Midcap® Index, Russell 2000® Index and the NASDAQ Composite. Impressive indeed, but the key question is whether the momentum can continue. If history is a guide, the odds are favorable that the market could post another year of positive returns, and investors should be able to find reasons to remain constructive about the outlook for U.S. equities. However, investors should also assess the current backdrop with prudence. Dig deeper and get more insights into this market from Sycamore Capital.
International Equity Franchise
As measured by the S&P® Developed Ex-U.S. SmallCap Index, international small-cap equities advanced 3.5% during the fourth quarter. This was the fourth consecutive quarter of positive returns, and for the full year, international stocks bested the S&P® 500 for the first time in seven years. The growing AI ecosystem, a continuing defense build-out and the mining of precious metals were the three key themes driving performance. Looking ahead, we expect market leadership to broaden as more companies begin to leverage AI adoption to enhance productivity and margins. Learn more about the outlook for international equities from Trivalent Asset Management.
- Trivalent International Developed Equity
- Trivalent International Equity
- Trivalent International Small Cap
- Trivalent Emerging Markets Small Cap
Value-Oriented Equity Franchise
Despite all the uncertainties and potential headwinds, investors cannot quibble with the overall performance of domestic equities as we look back on the fourth quarter and the past year. The S&P 500®, the proxy for the overall domestic stock market, printed new all-time highs in December and delivered yet another year of impressive double-digit returns. Equities across investing styles and up and down the cap spectrum participated in the rally, which was encouraging as investors may once again be looking beyond the narrow leadership that has dominated the market. Read why the RS Investments Value Team maintains that this is an exciting time to be a value-oriented investor.
Growth-Oriented Equity Franchise
Financial markets were volatile at times during the fourth quarter, but the prevailing themes underlying this market have remained largely intact. Equities across investing styles and up and down the cap spectrum moved mostly higher during the fourth quarter. Although the past year has been solid for growth-oriented investors, many questions remain as we head into 2026. Given the uncertainties ahead, we think risk management, particularly in the growth arena, is of paramount importance. Read the full commentary and find out where the RS Growth team sees opportunity and upside potential.
Macroeconomic Core Strategy Franchise
Following a third consecutive year of strong equity returns in a mature economic cycle, WestEnd Advisors remains cautiously optimistic for 2026. Notably, the team sees a range of opportunities and risks that highlight the importance of active management. Passive investment primarily relies on diversification for risk control, but the presumed diversification of major equity indices has been diminished by the buildup of severe market concentration in AI and tech-related mega-cap stocks. Learn more about the current macroeconomic environment and get more insights from WestEnd Advisors.
Economic and Market Commentary
All investments carry a certain degree of risk, including the possible loss of principal, and an investment should only be made with an understanding of the risks involved with owning a particular security or asset class. You are encouraged to seek professional advice regarding the best options for your particular circumstances. show less.
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.
Index performance does not reflect management fees, transaction costs or expenses that would be incurred with an investment. One cannot invest directly in an index. Past performance does not guarantee future results.
Advisory services offered by Victory Capital Management Inc. or its affiliate, WestEnd Advisors, both SEC-registered investment advisers. WestEnd Advisors provides the day-to-day management of portfolios for which it serves as the investment adviser.
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