Blog

October 31, 2025 – During the third quarter, the HighGround Capstone Fund posted solid returns and outperformed its benchmark for the period, as well as over the past 1, 3, and 5 years, consistent with our investment approach and long-term focus.

To provide additional context, here are five key takeaways from our third-quarter market update:

1. CAPITAL MARKETS:
   • Global markets ended the quarter on a strong note, supported by higher-than-expected global economic growth, new trade agreements between the U.S., Europe and Japan, and the Federal Reserve's first rate cut since December 2024.
   • The U.S. dollar ICE Index rose modestly by 0.9% for the quarter, gaining 2.2% versus the yen and 1.8% against the British poud, while remaining flat relative to the euro.
   • Global equities (MSCI ACWI) reached a new all-time high this quarter, continuing the rally that began in mid-April. With a gain of 7.6%, global equities rose amid easing trade tensions and robust corporate earnings.
     • For the second consecutive quarter, the best-performing sectors and largest contributors to returns were technology (+12.4%) and communication services (11.8%) as artificial intelligence (AI)-related stocks continued to lead markets. Notably, the top ten constituents in the MSCI ACWI accounted for approximately 50% of the index's total return.
   • U.S. equity markets (Russell 3000®) reached several all-time highs during the quarter, closing up 8.2%, bolstered by strong corporate earnings, lower interest rates and a resilient economy. Small-cap stocks (+12.4%) outperformed large-cap stocks (+8.0%), while growth (+10.4%) continued to outpace value (+5.6%). AI-related companies continued to drive performance in the S&P 500®, with the ten largest stocks contributing more than 70% of the index’s quarterly return of 8.1%, while the equally weighted S&P 500® rose 4.8% over the same period.
   • International equity markets (MSCI ACWI ex U.S.) rose 6.9% (7.9% in local currency) with gains across developed and emerging markets.
     • European stocks climbed 3.6%, supported by stronger-than-anticipated economic growth and easing trade tensions with the U.S. The financial sector was the strongest performer as European banks posted strong earnings growth.
     • Within the Asia-Pacific region, Japanese equities rose 8.0% on stronger-than-expected economic growth and easing inflation, while Hong Kong stocks advanced 9.1% on improving export activity following the prospect of easing of U.S. tariffs.
     • Emerging Markets (MSCI EM) rose 10.6% (12.2% in local currency), with ten countries posting double-digit returns. China, Taiwan and Korea were the largest contributors, driven by strong gains in semiconductor and software stocks benefiting from momentum in AI. Latin America (+10.2%) also performed well, led by Mexico and Brazil.
       
       
2. U.S. ECONOMIC GROWTH: The U.S. economy demonstrated continued resilience, supported by improving business sentiment as trade tensions eased. However, manufacturing activity remained sluggish due to uneven demand and lingering trade issues, while the services sector continued to expand, though at a slower pace.
   
   
3. U.S. INFLATION: The rate of inflation saw a slight uptick over the summer, with headline U.S. inflation, as measured by Consumer Price Index (CPI), rising 3.0% year over year in September. Core CPI, which excludes food and energy, also increased 3.0% over the same period. Shelter costs, the largest component of CPI, slowed to an annualized rate of 3.6%, down from 4.9% a year ago.
   
   
4. U.S. LABOR MARKET: Signs of underlying economic weakness emerged, as unemployment rose to its highest level since 2021, job growth stagnated and consumer confidence weakened.
   
   
5. GLOBAL ECONOMIC GROWTH: During the quarter, global economic activity began to pick up as U.S. trade tensions eased across various regions. Nevertheless, similar to the U.S., challenges persist, including elevated inflation in some regions, differing monetary policies among major central banks and ongoing uncertainties surrounding global trade.

If you have any investment questions, call our expert team today at 214.978.3300 or email info@highgroundadvisors.org.