March closed a turbulent quarter, with US protectionism eroding confidence, consumer sentiment weakening, and inflation expectations rising. US equities suffered their worst relative quarter since the 1980s, while Europe gained support from fiscal expansion plans and China rallied on AI optimism. Bonds provided stability, and gold hit record highs above $3,000. Umbra MPS portfolios fell alongside global risk assets but remained diversified, with fixed income and alternatives helping to cushion equity weakness during heightened macro uncertainty.
March 2025 capped a volatile quarter defined by geopolitical shifts and rising macro uncertainty. In the US, erratic policy signals and fading post-election optimism drove paralysis in corporate investment and a sharp drop in consumer sentiment, with two-thirds of households expecting higher unemployment. Inflation expectations climbed to 5.0% in the near term, keeping the Federal Reserve cautious as it held rates at 4.5%. Business bellwethers such as FedEx, Delta, and Walmart all issued downbeat outlooks, reflecting rising economic pressures.
Across the Atlantic, Europe charted a contrasting course. Ursula von der Leyen unveiled an €800bn defence plan, while Germany proposed the largest fiscal expansion in its post-war history, potentially totalling €1 trillion. These commitments underscored Europe’s determination to step up its economic and security role as US reliability is questioned.
Equities fell globally, with MSCI ACWI down –1.3% in March and –4.0% for Q1. The S&P 500 lost –5.6% in March, as stretched valuations and AI-related concerns triggered a sharp correction in the “Magnificent 7.” European equities, while buoyed by stimulus plans, still ended the month down –4.3%. China gained +2.0% in March and +15.3% in Q1, helped by AI momentum and renewed government support for the private sector.
Fixed income provided ballast. Global sovereign bonds gained +0.6% in March and +2.6% for the quarter, while US Treasuries rose +2.9%. European yields moved higher on expectations of fiscal expansion, while emerging market local debt outperformed hard currency bonds. Credit spreads began to widen, particularly in high yield, though they remain historically tight.
Alternatives were mixed. Gold surged to record highs above $3,000, supported by central bank buying, geopolitical risks, and inflation concerns. Property and infrastructure weakened in March but posted modest gains for the quarter.
Umbra MPS portfolios fell in March alongside global risk assets, with returns ranging from –2% in Defensive strategies to –6% in Equity portfolios. Diversification across fixed income and alternatives helped mitigate losses. The portfolios remain balanced to capture long-term opportunities while providing resilience against the near-term volatility of shifting geopolitical and policy landscapes.
