Navigating Market Volatility — Lessons from a Tumultuous First Half
Investment Insights
The first half of 2025 reminded investors of a timeless truth: markets are unpredictable, but resilience and discipline remain the most powerful tools in navigating uncertainty.
This year began with sharp swings in global markets, driven by unexpected policy shifts and geopolitical tensions. The most jarring moment came on April 2 nd — the so-called “Liberation Day” — when a surprise tariff announcement triggered fears of a global trade war. In just weeks, global equities (MSCI ACWI) dropped 16% from their peak. Yet, by the end of Q2, those same markets had rebounded, delivering a +10% return year-to-date.
The Power of Diversification
Despite the turbulence, diversified portfolios held up well. Bonds, international equities, and alternative investments each played a role in cushioning the impact of volatility. U.S. bonds (Bloomberg US Aggregate) returned +4% YTD, while international equities (MSCI All Country World Index ex US) surged +18% YTD, outperforming their U.S. counterparts. Even hedge funds, often scrutinized for underperformance, delivered solid returns with low volatility (+4% HFRI Fund Weighted Composite Index).
This performance underscores the importance of maintaining a strategic asset allocation. In moments of stress, it’s tempting to react — to sell, to shift, to seek safety. But history has shown that staying invested, especially through downturns, is often the most effective way to build long-term wealth.
Time in the Market vs. Timing the Market
The V-shaped recovery in Q2 is a case study in why market timing is so difficult. Investors who exited during the April sell-off likely missed the sharp rebound that followed — those who stayed the course were rewarded.
This principle, time in the market beats timing the market, is more than a cliché — it’s a cornerstone of long-term investing. Markets will always experience periods of volatility, but over time, they tend to reward patience, discipline, and a focus on fundamentals.
Looking Ahead
While the first half of 2025 was marked by volatility, it also revealed the strength of diversified, globally oriented portfolios. As we look to the second half of the year, we remain cautiously optimistic. Economic fundamentals — steady growth, moderating inflation, and strong corporate earnings — provide a constructive backdrop. But we also recognize the wide cone of uncertainty ahead, from trade negotiations to fiscal policy shifts.
In this environment, our approach remains consistent: stay diversified, stay disciplined, and stay focused on what matters most.
Recent Insights
IMPORTANT DISCLOSURES
The views expressed in this document, and the description of data supporting these views, are those of SCS Financial Services (together with its affiliates, “SCS”). The materials contained herein do not constitute an offer to sell or a solicitation of an offer to buy any security. Any such offering or solicitation can be made only by means of delivery of a definitive Confidential Private Placement Memorandum (“Offering Memorandum”) which sets forth in detail the terms and conditions of the offering and the applicable risk factors and should be reviewed in its entirety prior to investing. Securities may not be offered, sold or delivered to any prospective investor who does not satisfy certain minimum financial and sophistication criteria, or in any jurisdiction in which such offer is not authorized. SCS does not provide tax, accounting or legal advice and prospective investors should consult their professional advisers as to the tax or legal consequences of any potential investment.
The information in this document is as of the date indicated and is subject to change without notice. In preparing this document, SCS has relied upon certain information provided by third parties without independent verification of the accuracy or completeness of such information and SCS accepts no liability for any direct or consequential losses arising from its use.
Forward Looking Statements
Certain statements contained in this document may be forward-looking statements. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. Forward-looking statements that reference past trends or activities should not be taken as a representation that such trends or activities will necessarily continue in the future. Any economic or market forecast presented herein reflects the judgment of SCS as of the date of this material and is subject to change.
Risks
All investments risk loss of capital and there is no guarantee that an investment will achieve its investment objective. Private Fund investments in particular involve significant risks and are intended for experienced and sophisticated investors. Some of the risks associated with an investment in Private Funds include: (i) use of leverage or other speculative investment practices, (ii) illiquidity of investments including restrictions on transfers, (iii) potential multiple layers of fees and expenses, and (iv) lack of comprehensive regulatory regime. For a complete description of the risks associated with such investments please review the “Risk Factors” and “Conflicts of Interest” sections in the relevant Offering Memorandum.
Performance and Fees
Performance for the most recent time period presented may be based on estimated returns and is subject to change. Performance of individually managed accounts will vary based on constraints, timing, funding levels and other factors and may be lower or higher than any performance shown herein. Past performance is not a guide to future results.
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