August was flat overall, with sterling’s +2% rise against the dollar erasing gains from global markets in GBP terms. US equities advanced on strong earnings and Powell’s dovish Jackson Hole speech, while small caps rallied. Europe and Japan posted modest gains, and China surged on policy support and fund inflows. Bonds were mixed, with shorter-dated US Treasuries rallying while longer yields rose on fiscal concerns. Gold gained +4.8%, while Umbra MPS portfolios were broadly in line with ARC, cushioned by alternatives but weighed by FX and active equity drag.
August 2025 proved challenging for GBP-based investors as sterling strengthened by +2% against the US dollar, offsetting otherwise positive global market returns. This currency move weighed on international assets, particularly USD-denominated emerging market debt, and left Umbra MPS portfolios broadly flat, with results in line with ARC benchmarks.
Global equities rose +2.5% (MSCI ACWI), supported by resilient corporate earnings. In the US, the S&P 500 gained +2.0%, with materials and healthcare leading, while small caps surged (+7.1%, Russell 2000) on dovish signals from Jerome Powell’s final Jackson Hole address. Technology lagged despite strong “Magnificent 7” results, as questions emerged about the near-term profitability of AI investment. European equities gained +1.1% but were held back by political uncertainty in France. The UK lagged (+1.5%), as banks sold off on concerns of additional taxation. Japan advanced (+4.5%, Topix) on improving data and a supportive trade deal with the US. China’s market rallied strongly (+10.5% CSI 300), boosted by liquidity, inflows, and policy support.
Fixed income was mixed. US front-end yields fell on weaker jobs data and Powell’s dovish tone, but longer yields rose on fiscal concerns, steepening the curve. European yields climbed on firmer data and German fiscal expansion, while French deficit concerns lingered. UK gilts rose despite a BoE rate cut to 4%, as inflation surprised higher. Credit performed well, with US investment grade and global high yield gaining +1.0% and +1.5% respectively. EM debt also advanced, supported by continued demand and easing prospects.
Alternatives contributed positively. Gold rose +4.8% on central bank buying, Fed independence worries, and diversification demand, with central banks now holding more gold in aggregate than US Treasuries. International property also added value.
Umbra MPS portfolios finished broadly in line with ARC benchmarks. Active UK and European equity allocations detracted modestly, while alternatives helped offset currency-driven losses. Defensive and cautious income portfolios fared better, while higher-risk strategies were more impacted by FX headwinds. Despite August’s flat outcome, year-to-date returns remain positive across the MPS range, with long-term positioning unchanged.
