May saw a strong rebound for risk assets as solid corporate earnings, dovish central banks, and softer tariff rhetoric from Trump lifted sentiment. Global equities gained +5.8%, with the Nasdaq surging nearly 10% and Europe continuing to benefit from policy support. Umbra MPS portfolios materially outperformed ARC benchmarks, particularly in Blended and Active models, with strong contributions from European and Japanese managers. Credit and EM debt added gains, while alternatives were mixed. Patient positioning through recent volatility proved effective.
Markets staged an emphatic recovery in May, erasing much of the February–March correction. Strong corporate earnings, central bank support, and a temporary easing of US–China tariff tensions restored risk appetite. Even the Nasdaq, which had fallen 23% at its low, ended the month just 3.5% below all-time highs.
US equities advanced sharply (S&P 500 +5.6%, Nasdaq +9.7%), supported by broad-based sector gains led by technology (+10.5%), communication services (+9.0%), and industrials (+8.2%). Earnings season surprised positively, with 78% of S&P 500 companies beating estimates, delivering year-on-year growth of +12.9%. Forward guidance was more cautious, however, reflecting lingering tariff uncertainty. Healthcare (–3.5%) and real estate (–3.4%) underperformed, pressured by policy shifts and bond yields.
Europe maintained its momentum, with the MSCI Europe ex-UK rising +4.7%, driven by technology, industrials, and financials. Strong bank balance sheets, higher net interest income, and record levels of shareholder distributions have underpinned the sector’s outperformance. UK equities lagged (+3.4%), held back by healthcare, consumer staples, and utilities. Emerging markets rose +4.3%, with Taiwan (+12.5%) and South Korea (+7.8%) boosted by Saudi Arabia’s $600bn AI investment deals.
Fixed income was mixed. Sovereigns declined (Citigroup World Government Bond Index –0.7%) as deficits and downgrades weighed, but corporate credit and EM debt were resilient, supported by improving sentiment and a weaker US dollar. High yield returned +1.7%, while EM local currency bonds gained +1.1%.
Alternatives were mixed: gold fell modestly as safe-haven demand faded, while property (+2.2%) gained. Infrastructure was broadly flat.
For Umbra MPS, May was an excellent month. Portfolios significantly outperformed ARC benchmarks, particularly in Blended and Active strategies further out the risk curve. Standout contributions came from active equity managers in Europe (BlackRock European Dynamic Fund +6.8%) and Japan (Arcus Japan Fund +6.2%), as well as high yield credit exposure. While models remain slightly behind ARC year-to-date, long-term outperformance across 1, 3, and 5 years remains intact. Patience and a focus on fundamentals through earlier volatility have positioned Umbra portfolios strongly.
