Ronald van Genderen

“Diversification is the only free lunch in investing,” said Harry M. Markowitz, the father of modern portfolio theory. He referred to the idea that broad diversification is likely the best way to limit portfolio risk without sacrificing returns.

Sustainable investing has been under pressure for some time, not least due to the policies of U.S. President Donald Trump. This shift in sentiment has also hit ecology funds hard.

Emerging markets delivered a relatively resilient start to 2025. Morningstar this week compares the Pzena Emerging Markets Focused Value fund and Stewart Investors Global Emerging Markets Leaders fund.

For investors in alternative energy companies, the election of an American president whose slogan is “drill, baby, drill” was bad news. Since Donald Trump won the election on November 6 and became the 47th president of the United States, funds in the Morningstar Equity Sector Alternative Energy category have significantly underperformed global equities.

Sustainable investing has faced a challenging period since 2021, following years of seemingly unstoppable growth. While investor capital has continued to flow into sustainable funds, the pace has significantly slowed compared to the boom years.

With a loss of approximately 1 percent in euros during the fourth quarter, emerging markets ended 2024 on a slightly negative note. Although the year delivered a return of 14 percent, the emerging markets index lagged behind the global index, which achieved a return of 25 percent.

The African continent appears to generate little enthusiasm among investors. In fact, the total assets under management in African equity funds are so small that the survival of many funds is in question.

The European automotive sector is going through a challenging period. Troubling developments have put pressure on the stock prices of European car manufacturers, leading to a decline in their significance within the global equity market. This comes at a time when the weighting of the global automotive industry in the worldwide stock index is at its highest level in over two decades.

Interest in water funds, like sustainable investing more broadly, has recently waned among investors. This marks a departure from the peak during the COVID-19 pandemic, which saw significant inflows. Although there are more than 40 different funds in this category, only a few manage the majority of the assets.

Chinese stocks experienced an unprecedented rally in the final week of Q3. A series of unexpected stimulus measures pushed Chinese equities to their largest weekly rise in 15 years, supporting the outperformance of emerging markets compared to developed markets over the past three months.