During the first quarter of 2025, financial markets experienced significant uncertainty, primarily due to investor expectations regarding the lack of clarity in US economic policies.
The new Trump administration’s plans included weakening the dollar and imposing tariffs on foreign trade.
This led to an outflow of capital from dollar-denominated assets and improved performance of European stock markets. Meanwhile, in Europe, the new German government decided to abandon its traditional fiscal discipline to undertake an ambitious infrastructure modernization plan.
For its part, the European Union, in response to rising international geopolitical tensions, announced an ambitious rearmament plan.
These European spending programs were perceived as a kind of stimulus for the future economy, boosting stock market indices across the continent.
In the United States, enthusiasm for artificial intelligence has tempered, especially as some companies, such as China’s DeepSeek, have demonstrated that it is possible to launch advanced products with much lower investments than those typically required by American firms.
The entire first half of the year was marked by turbulence in equity markets, with US indices underperforming their European counterparts and a weakening dollar.
The prevailing climate of uncertainty continued to benefit gold, which posted significant gains.
Regarding government bond markets, European bond yields rose in anticipation of increased debt issuance to finance fiscal stimulus programs, while US yields fell due to emerging expectations of an economic slowdown.
Furthermore, the new Trump administration repeatedly reiterated its intention to lower long-term interest rates to make financing public debt less onerous.
The impact of the dollar’s depreciation has caused the results measured in local currency (first chart) or euros (next chart) to vary significantly depending on the exposure to the US currency.
Returns of the average investor profile in inbestMe at the end of March 2025
At inbestMe, the average investor profile is a 7 (7/10)*. This average investor profile has remained almost unchanged since we started our business, so we believe it is quite representative.
In the graph above on the left, we see how the average investor profile* at inbestMe has achieved a cumulative return of 62.1% from January 1, 2017, to March 31, 2025, or 45.8 percentage points higher than the “Mixed Equity” category, according to Inverco, which stands at 16.3% over the same period.
An investment of €100,000 made on January 1, 2017, would have yielded €162,100 instead of €116,300, or €45,800 more.
On the right, we see how the average investor profile at inbestMe has achieved an annualized return (CAGR) of 6.0%, which is 4.1 percentage points higher than the “Mixed Equity” category, according to Inverco, which stands at 1.9% over the same period.
These returns are undoubtedly exceptional, both in absolute and relative terms compared to the benchmark index, and we are pleased because it is one of the reasons we created inbestMe: to help our clients invest better (achieve good returns) and with high customization.
*To perform this calculation, we weight the number of “investor” clients by profile relative to the total. To do this, we consider the different index fund profiles, ranging from 1 to 10. The savings portfolio, target portfolios, and bond portfolios are excluded from the calculation of the average investor profile.
** The benchmark index for the 7/10 profile is Inverco’s “Mixed Equity” category.
If you’d like to see more details about our portfolio returns (for this period or others, and for all portfolio types and risk profiles), you can visit the inbestMe returns page on our website, where you’ll find comparisons with other benchmark indices and risk ratios such as volatility, Sharpe ratio, and drawdowns, and for different periods. This data is updated at the beginning of the month with cumulative data up to the previous month’s close.
Portfolio returns as of the end of March 2025
Most of our diversified portfolios of index funds and ETFs posted negative returns as of March 31, 2025, following exceptional returns in 2024.
Returns on index fund portfolios ranged from 0.5% to -3.1% in the first quarter of 2025, with an average of -1.4%, compared to an average return of 0.2% for all Spanish investment funds, as reported by Inverco.
Meanwhile, ETF portfolio returns ranged from 0.6% to -1.1% in the first quarter of 2025, averaging 0.4%, compared to an average return of 0.2% for Spanish investment funds as a whole, according to Inverco. ETF portfolios have benefited from their exposure to gold, which is at an all-time high (which is not possible in index fund portfolios).
We find it important to highlight in this context, as seen in the following chart, that our index fund portfolios of €5,000+ (those with the greatest diversification and accessed by the majority of our clients—the average per client is €25,000) have benefited from limited exposure to the dollar and an overweight in European indices relative to the MSCI World Index. Returns have ranged from 0.7% to -0.7%, with an average of 0%.
The prudent portfolios (ranked 1 to 5) remain in positive territory, while those with greater exposure to equity markets (ranked 7 to 10) have been more affected by the decline in global indices, although losses remain relatively contained.
We are currently monitoring the evolving international environment to optimally manage the risks arising from geopolitical and trade dynamics.
We continue to maintain limited exposure to dollar-related risks in these portfolios. As always throughout the year, we will reevaluate our currency strategy and geographic allocations within the portfolio. Meanwhile, our portfolios are performing well in this context compared to other robo-advisor portfolios, as we recently reported.
Comparative returns of the different inbestMe portfolios at the end of the first quarter of 2025
At the close of the first quarter of 2025, the average profitability of all inbestMe portfolios oriented towards medium and long-term investment (that is, excluding the Savings, Objective and Bond portfolios, which we analyze separately) has been affected by the fall in equities.
The best-performing portfolios, especially in the lower profiles, were the standard ETF portfolios (USD), which benefited from higher interest rates in this currency, achieving an average return of +2% (2.5 points above the average of -1.3%).
This was followed by the standard pension plan portfolios, which gained an average return of 1.8%, thanks to the fact that they also benefited from limited exposure to the dollar and an overweight in European indices relative to the MSCI World Index, outperforming the average by 1.1 percentage points.
The value ETF portfolios (USD) also performed better relative to the euro, also closing in positive territory (+1.6%) as they were less exposed to the declines in growth stocks.
SRI portfolios (-2.9% in funds and -1.6% in pension plans) have generally been the worst performers due to the relative performance of SRI funds in 2025 (continuing the trend seen in 2024). The performance of the global SRI equity index has been 4 percentage points worse than the overall index so far this year.
Cumulative returns and CAGRs at the end of the first quarter of 2025
Our diversified portfolios of index funds and ETFs are designed for the medium and long term, and this is where they require special analysis.
The following chart compares all of our portfolio profiles with the different categories of Inverco’s statistics for investment funds in Spain, from 2017 to the first quarter of 2025. This allows us to compare our portfolios with investment funds that cover the same asset class and have a similar risk profile. The cumulative return ranges from 8.1% for Profile 1 to 97.1% for Profile 10.
On average, our portfolios achieve a cumulative return of 48.2% compared to Inverco’s 15.9%, which is 32.3 percentage points higher. An investment of €100,000 made on January 1, 2017 would have become €148,200 instead of €115,900, or €33,000 more.
On average, our portfolios achieve an annualized return of 4.7% (APR) compared to Inverco’s 1.7%, which is 3 percentage points higher. It is noteworthy that our portfolios outperform their benchmark portfolios across all categories. This difference is particularly significant (in percentage points) in profiles 6 to 9, where the majority of our clients are concentrated, with differences of 3.3 to 6 percentage points. The differences in lower profiles are also significant in relative terms, multiplying by 3 to 5 times.
