An interview with:
Daniel Babington
Portfolio Manager at TAM Asset Management (TAM)
Daniel joined in TAM in 2020 after graduating with first-class honours in Economics. Recognised as a 2024 Citywire Top 30 Under 30 and multi-award finalist, Daniel combines expertise and passion to deliver impactful sustainable investment strategies, addressing global challenges while driving financial returns for investors.
About TAM
Part of the Amber River Group, TAM is an award-winning discretionary fund manager (DFM) with over 16 years’ active investing and fund research experience. They have developed a diverse range of model portfolios for clients, including active, passive, sustainability-focused and Sharia-compliant investment strategies.
Staying the Course Pays Off
Despite a backdrop of global uncertainty — from escalating conflicts to shifting trade policies — markets proved more resilient than many expected in the second quarter of 2025. While headlines painted a picture of instability, investors who stayed invested were rewarded, particularly in areas like technology and artificial intelligence.
Although there’s been growing interest in shifting focus from the US to Europe, and from tech to sectors like energy and defence, this hasn’t yet translated into a clear lead for European markets. Instead, the strongest returns once again came from familiar names in US tech, reinforcing the value of patience and long-term thinking.
What Happened in Q2?
Markets began the quarter on shaky ground. A surprise announcement on US tariffs triggered a sharp drop in the S&P 500, but confidence quickly returned as trade tensions eased, and company earnings came in stronger than expected. Technology stocks — which had led the fall — also led the recovery, with large US firms posting solid results.
European markets made gains too, particularly in the UK and Germany, helped by increased government spending on infrastructure and defence. Sectors like aerospace, technology, and financials stood out. In Asia, Japan performed well, while China’s markets remained under pressure.
Bond markets were volatile early on but settled as inflation expectations fell and hopes for interest rate cuts grew. Shorter-term bonds performed best, and despite concerns over US debt, yields on government bonds in both the US and UK declined towards the end of the quarter.
“Staying invested paid off — especially for those who held firm through the noise.”
A Case for Diversification
The quarter also highlighted the benefits of spreading investments across different regions and asset types. As the US dollar weakened — falling over 7% in the quarter and more than 11% year-to-date — international investments and alternative assets helped balance portfolios. Gold reached record highs, once again proving its worth during uncertain times.
There’s also growing debate about whether the US will continue to dominate global markets as it has in recent years. While it’s too early to say for sure, the shift in sentiment is a reminder of the importance of maintaining a balanced approach.
Global Growth Holds Steady
Despite early concerns, global growth held up better than expected. While the IMF trimmed its forecast for 2025 to 2.8%, economic data — particularly from Europe — painted a more positive picture, supported by government spending and industrial activity.
Central banks took a cautious stance. The US Federal Reserve kept rates on hold, waiting to see how tariffs might affect inflation. The Bank of England cut rates in May but paused in June due to persistent inflation in services. The European Central Bank made two cuts but signalled a possible pause. Meanwhile, central banks in Japan and China maintained supportive policies, with China adding further stimulus.
“The fundamentals of long-term investing remain unchanged, even in a shifting world.”
Looking Ahead
As we move into the second half of the year, uncertainty remains. Key areas to watch include:
- How US trade policy evolves, especially around tariffs
- Whether market leadership stays concentrated in a few large tech firms or begins to broaden
- The fiscal outlook in major economies
- Central banks’ next moves on interest rates
- The impact of ongoing geopolitical tensions on commodity prices
While risks remain, so do opportunities — particularly in international markets and sectors supported by long-term trends like technology and infrastructure. The second quarter served as a reminder that markets can look past short-term noise and focus on fundamentals.
Key Takeaway
Q2 reinforced a simple but powerful lesson: staying invested and maintaining a well-diversified portfolio can help weather uncertainty and capture growth. While the world continues to shift, the fundamentals of long-term investing remain unchanged. Our investment partners continue to focus on these fundamentals, making thoughtful decisions on your behalf. And as always, we’re here to ensure your financial plan stays aligned with your goals — not the headlines.
Get in touch
If you have any questions about your plan or how the markets may affect it, please get in touch with your adviser.
To speak to one of our team, arrange an appointment or find out more, call 0800 915 0000, or alternatively use our contact form here.
Disclaimer
The information within this article was correct at the time of publishing, but laws and tax rules are subject to change. Your circumstances and where you live in the UK may also have an impact on your tax treatment.
To learn about the government’s most recently-announced changes, please read our latest budget roundup: 2024 Autumn Budget Update
