September 2025 Index Returns

In stocks (equities):

  • Emerging markets stocks as measured by the MSCI Emerging Markets index were up +7.2% last month, which was the highest return among all regional stock asset classes, and are now up +27.5% on the year. By comparison, the S&P 500 index returned +3.7% last month and is up +14.8% on the year.
  • The U.S. stock market continued its ascent (+3.5% in September, Russell 3000 index) and was influenced by a strong 3.8% GDP estimate for Q2, continued AI-spending deals being announced by large tech companies, and a lowering of the Federal Funds rate with the Fed considering more cuts by the end of the year. The leading asset class among U.S. stocks in September was large-cap growth stocks (+5.3%, Russell 1000 Growth index) as well as YTD (+17.2%). However, small-cap value stocks led the pack during the last three months (+12.6%, Russell 2000 Value index).
  • International developed stock markets as measured by the MSCI World ex USA index gained during the month (+2.1%) despite the U.S. dollar appreciating slightly. The best performing asset classes last month within developed ex-U.S. stocks were small-cap stocks and small-cap value stocks (+2.2%, MSCI World ex USA Small Cap and Small Cap Value indices).
  • On a YTD basis, the highest performing stock benchmark was international small-cap value, which gained +31.9% (MSCI World ex USA Small Cap Value NR USD) and has outpaced U.S. large-cap growth stocks (Russell 1000 Growth index) by +14.7% so far.

In fixed income (bonds):

  • The Federal Reserve's rate setting body, the Federal Open Market Committee (FOMC), lowered the Federal Funds rate by 0.25% for the first time this year in their September meeting citing a softening labor market. A lowering of the Federal Funds rate, which the Fed controls, would lead to a lowering of yields in ultrashort maturity treasuries but will not directly influence treasuries of longer maturities (e.g., 10-year treasury yields). Market participants are expecting two additional rate cuts between now and the year's end, according to CME FedWatch.
  • Bond returns in Treasuries were positive for all maturities last month as yields fell across most of the yield curve, with the exception of short-term inflation-protected treasuries (-0.2%, ICE BofA 1-5 Yr US Inflation Linked Treasury index).
  • Corporate and municipal bonds were positive across all maturity segments. The Bloomberg U.S. Aggregate Bond Index was up +1.1% last month.
  • Outside of the U.S., the Bloomberg Global Agg ex-US (hedged to USD) Index was up +0.5% last month.
  • All bond segments continued to show positive performance over the trailing one- and three-year periods with the exception of long-dated treasuries.

Despite ongoing swings in the U.S. stock market and elevated geopolitical risks worldwide, a globally balanced 60/40 portfolio has gained +12.6% year-to-date. This underscores the value of diversification and the importance of staying focused on the factors within our control.

  • As always, please let us know if you have any questions by emailing support@xyinvestmentsolutions.com
  • As an additional note, please keep in mind that these reflect historical performance of the current models, not necessarily how accounts were invested in the past.