After a brief period of volatility in November, global financial markets ended 2025 on a strong note. Falling interest rates, combined with continued economic resilience, supported investor confidence and drove broad-based gains across both equity and fixed income markets. These conditions allowed the OCM portfolios to close the year with robust returns, rounding off an outstanding year for investors.
In December, both the US Federal Reserve and the Bank of England cut interest rates in line with expectations, reinforcing confidence that inflation is moderating and that policymakers remain focused on supporting economic growth. Bonds and equities responded positively, contributing meaningfully to year-end portfolio performance.
Looking across 2025 as a whole, markets delivered exceptional returns. The strong recovery following the April sell-off highlighted the resilience of global markets and rewarded investors who remained focused on fundamentals. The OCM portfolios benefited from this environment, delivering strong performance relative to benchmarks.
Positive momentum has carried into early 2026, with defence and energy stocks moving higher amid geopolitical developments in Venezuela, providing additional support to UK and European equity exposures.
Geopolitical Developments: Limited Market Impact
While geopolitical headlines have remained prominent, their direct impact on financial markets has so far been limited. Investors have largely looked through short-term political noise, remaining focused on underlying economic fundamentals.
Recent US military action in Venezuela attracted attention, particularly within energy markets. However, Venezuela accounts for only around 1% of global oil supply, and the muted response in oil prices reflects the limited impact on global energy dynamics. Over the medium term, any increase in production would likely support lower energy costs, which would be positive for global growth.
Similarly, developments around Greenland and broader NATO defence discussions continue to be monitored. At present, these have not materially altered our economic outlook or investment positioning, and we remain comfortable with current portfolio exposures.
Central Banks Support a Constructive Backdrop
December was a key month for global central banks. The US Federal Reserve and the Bank of England both reduced interest rates, confirming a shift towards more supportive monetary policy. While there remains some divergence of opinion among US policymakers, markets have welcomed the overall direction towards lower borrowing costs.
Elsewhere, the European Central Bank held rates steady, while the Bank of Japan raised interest rates. Despite initial concerns that tighter Japanese policy could weigh on equities, improved clarity and supportive domestic conditions allowed Japanese equities to finish the year strongly, enhancing portfolio diversification.
Overall, central bank actions throughout 2025 played a central role in supporting asset prices and reducing financial stress, providing a solid foundation for market performance.
Performance and Portfolio Positioning
2025 was an exceptional year for both markets and the OCM portfolios. A disciplined, quality-focused investment approach and active management enabled portfolios to capture upside while managing risk effectively.
The OBI Volatility Managed portfolios delivered strong risk-adjusted returns, achieving lower volatility than their benchmarks while still participating meaningfully in market gains. This balance remains central to our approach, particularly during periods of heightened uncertainty.
Within the Long Hold portfolios, full investment in assets we believe are well positioned for long-term growth drove strong outcomes. These portfolios are designed to tolerate short-term fluctuations in pursuit of attractive medium- and long-term returns, and 2025 clearly demonstrated the benefits of maintaining this long-term focus.
Fixed income performed particularly well over the year as borrowing costs declined across major developed economies. Bonds once again proved their diversification value, providing both income and capital appreciation. Looking ahead, we continue to view fixed income as attractively positioned, with yields offering compelling income opportunities and default risks remaining low.
Commodity-related investments were also positive contributors, with demand for precious metals supported by geopolitical uncertainty and sustained central bank buying. Exposure to Natural Resources within the Long Hold Growth portfolios allowed us to benefit from these trends while retaining flexibility across energy and broader commodity markets.
Past performance cannot be used as a guide to future performance and the value of your investment will fall as well as rise in value. You may not get back all your investment and the final value of your investment will depend on the performance of your portfolio. The actual performance of an individual client’s portfolio may differ due to different funds being used and being restricted in relation to certain asset allocations. Performance figures quoted include fund manager charges but exclude adviser, discretionary, custodian and switch charges. Unless stated, income is reinvested into the portfolio. The information contained in in this document is for information purposes only. It does not constitute advice or a recommendation or an offer or solicitation for investment. OCM Wealth Management Limited is authorised and regulated by the Financial Conduct Authority (FCA Registration No: 418826) OCM Asset Management is a trading name of OCM Wealth Management Limited
