• December was another positive month for global equity markets

• In the month of December developed large cap equities advanced 0.8%, global small caps gained 0.9% and emerging markets were up 3.0%.

• 2025 was an extraordinary year for stock markets, driven by Trumpocracy, “liberation” day, the AI boom and USD weakness

• The trash rally observed from “liberation day” to November (stronger performance of fundamentally weaker companies) impacted mainly US equities.

• Artico Sustainable Emerging Market Fund was up 35% for 2025, beating both standard and Paris-aligned benchmarks

• The fund completes now five years in a row (2021-2025) with robust outperformance in every single calendar year

• Global equity investors can look back to three consecutive years of above average, double-digit absolute returns

• For the full year 2025, developed large cap equities (+21.1%), global small caps (+19.9%) and emerging markets (+33.6%) were all up.

• This has led to historically high valuations, particularly in the US (see page 2)

• Should investors worry or is there room for optimism?

• Globally supportive fiscal and monetary policies and very robust company profits should provide for further equity market gains

• From a valuation perspective, small caps and emerging markets seem to offer the best potential

• Several key risks are likely to create more volatility during 2026

• AI-valuation concerns will certainly shake markets

• The record-high debt levels paired with a potential further loss of confidence in long-term treasuries and the USD could cause significant market turbulences

• The USD is likely to weaken further, while the US yield curve is steepening

• Investors should make sure their portfolio is prepared for the unexpected by focusing on high-quality companies with solid growth, a clear competitive advantage and a moderate valuation

• We recommend investing in robust investment strategies considering multiple factors and not overly dependent on a particular scenario.