Main with-profits fund investment information

Global markets performed strongly in 2025, with global equities, especially outside the US leading the way. LV=’s strategy to diversify, and tactical decisions made, led to top quartile outcomes for our members.

Global equities had a great 2025, growing by 22.1% helped by lower inflation, interest rate cuts and AI driven corporate earnings. Global equities outside the US took the lead for most of the year, helped by a weaker US dollar and attractive valuations, which helped Europe, Japan and Emerging Markets deliver strong returns. Emerging Markets led developed markets as the region’s corporate reforms and stocks focussed on AI infrastructure drove above expectation returns. While the US lagged global peers, the S&P 500 still managed its third consecutive year of double-digit gains. 

We had significant volatility largely in the US. Firstly, in the Spring we had renewed tariff led trade wars, with the US average tariff rate hitting a high not seen since World War II. The S&P 500 fell 19% over this period. Secondly, the US government was shut down in the Autumn again driving volatility. However, with tariffs ultimately rolled back to lower levels and the Federal Reserve cutting rates the US market ended up gaining on the year. LV= managed these risks over the year via a globally diverse Strategic Asset Allocation, benefitting from the high returns achieved in Europe, Japan and Emerging Markets.

UK equities saw strong returns, supported by stabilising inflation and companies reporting improved earnings. Although performance lagged some other international markets, the FTSE All Share still posted a respectable gain of 19.8% for the year.

Fixed income delivered another positive year, growing by 4.8%, as bonds offered high coupon (interest) rates and yields gradually declined (meaning bond prices increased) following coordinated rate cuts by major central banks. Corporate bonds, high yield bonds, and emerging market debt all contributed positively, helping to offset pockets of relative weakness in government bond markets.

Commodities (for example mined materials and agricultural products) gained materially over the year, as investors sought diversifying assets amid rising geopolitical risks. Gold increased by 65%, the best calendar year for the asset since 1979, and LV= profited from a tactical position in gold in 2025, boosting portfolio level returns, while adding stability.