December delivered strong relative outcomes for Umbra’s MPS range, capping a robust quarter and full year of performance. Broad-based return drivers supported results, with international equities, spread-related fixed income and alternatives all contributing positively. A disciplined approach to risk and diversified exposures helped portfolios navigate elevated valuations and narrowing market leadership, while continued bifurcation across regions and sectors created opportunities for selective positioning as the year drew to a close.
Global markets closed the year on a firmer footing, supported by easing financial conditions and growing confidence that the global tightening cycle has peaked. Softer inflation prints and further signs of labour-market cooling reinforced expectations for monetary easing in 2026, helping stabilise risk appetite despite elevated valuations and lingering geopolitical uncertainty. Market leadership, however, remained narrow, with investors increasingly sensitive to earnings delivery and balance-sheet discipline, particularly within growth and technology segments where expectations remain demanding.
Regional equity performance continued to diverge. European equities posted solid gains, supported by easing inflation, lower interest rates and improving medium-term growth expectations, while a more balanced sector composition helped temper volatility. UK equities also advanced, benefiting from attractive valuations, dependable income and increased shareholder distributions, though performance remained concentrated across a small number of sectors. US equities lagged peers as leadership narrowed and markets became more selective around AI-related spending intensity. Japan continued to perform well, supported by yen weakness and improving sentiment across the semiconductor supply chain, while Asia ex-Japan lagged modestly as investors consolidated gains following a strong year.
Fixed income delivered positive returns, extending the rally seen across risk assets. Government bonds benefited from softer inflation data and expectations for further policy easing, with US Treasuries and UK gilts outperforming as rate cuts were delivered. In contrast, German and Japanese government bonds underperformed amid fiscal expansion and ongoing policy normalisation respectively. Credit markets continued to benefit from spread compression, supported by generally resilient corporate fundamentals, although valuations became increasingly stretched, particularly within investment-grade credit as issuance rose toward year-end. Emerging market debt edged higher, supported by favourable currency moves and improving macro fundamentals, though performance varied across regions.
Alternative assets delivered mixed performance over the month but strong gains over the year overall. Gold continued to perform well, supported by sustained central-bank demand and a macro backdrop characterised by policy uncertainty and looser global monetary conditions. Listed real assets lagged more broadly, as higher discount rates and sector-specific headwinds weighed on returns, though sentiment remained more constructive than earlier in the year.
Overall, Umbra’s MPS portfolios navigated December’s market environment effectively. Diversified exposures, disciplined risk positioning and selective tilts helped preserve relative performance during a period marked by elevated valuations, narrowing market leadership and ongoing policy uncertainty.
