Excellent returns from our portfolios at the end of June 2025, overcoming a volatile semester.

Market commentary as of end of June 2025

The first half of 2025 has been a real roller coaster for global stock indices after Trump announced higher-than-expected tariffs on April 2. The massive and indiscriminate sell-off of U.S. assets was so intense that Trump was forced to backtrack and suspend the implementation of the tariffs.

Since then, indices have experienced an extraordinary recovery, unexpectedly reaching new highs. Looking at the MSCI index in dollar terms, the recovery has been V-shaped with a 25% rebound from the lows (at the time of writing this report).

This recovery was driven by the fact that many institutional investors were underweight in risk assets in April and were forced to chase the rising indices throughout the rally. In addition, the feared inflationary effects of the tariffs did not materialize. In reality, the U.S. did experience a certain increase in goods inflation, but this was more than offset by containment in the services component.

Consumption remains strong, also supported by the fact that the stock market rally has made households with savings feel wealthier. The labor market, meanwhile, remains robust, with an unemployment rate currently at 4.1%.

The ECB has continued cutting rates, setting the deposit rate at 2%, while the Fed has preferred to wait and see what effect the tariffs will have on prices. The Fed Funds target rate remains at 4.25–4.50%. Powell’s decision not to lower rates has sparked a strong controversy with Trump, who even threatened to remove the Fed chair.

For European investors, currency issues have been very relevant this year when evaluating portfolio performance. After reaching an exchange rate of 1.02 against the euro, the dollar has weakened by around 14%. A weaker dollar was one of the Trump administration’s objectives to reduce the U.S. trade deficit. A weaker dollar makes imports more expensive and makes U.S. products more attractive to foreign buyers. Trump’s attacks on Powell, which put the central bank’s credibility at risk, have not helped the U.S. currency either.

This year, returns in “local currency” (see next chart)…

…are radically different from returns in euros, especially for dollar-denominated assets (see next chart):

Gold has once again benefited from all this uncertainty. As observed, it tops both charts. Since 2022, it has been the subject of major purchases by central banks seeking to diversify their reserves and reduce their exposure to the dollar. Part of these purchases has also gone into cryptocurrencies, which now enjoy full acceptance from institutional investors and have the backing and support of the Trump administration.

As for fixed income, the ECB’s rate cuts have not translated into significant gains in bond prices. In particular, longer-term bonds—especially in Japan, but also in Europe and the U.S.—have continued to struggle. In recent weeks, there has been a notable increase in the so-called risk premium, i.e., the additional yield investors demand to hold long-term sovereign bonds over short-term ones.

On the other hand, the corporate bond segment has remained very strong, despite credit spreads remaining relatively tight compared to historical averages. Corporate debt is perceived as relatively safe and, while governments continue to accumulate debt, corporate balance sheets remain quite solid.

Outstanding historical returns for inbestMe’s average investor profile (7/10): (+67.2% accumulated / 6.2% CAGR)

At inbestMe, the average investor profile is 7 (7/10)*. This average investor profile has remained virtually unchanged since we started operating, so we consider it quite representative (although it is currently at 7.4, slightly higher).

In the upper left chart, we see how inbestMe’s average investor profile* achieved a 67.2% accumulated return from 01/01/2017 to 30/06/2025, i.e., 48.5 percentage points more than the “Mixed Equity” category according to Inverco, which returned 18.7% over the same period.

On the right, we see that the average inbestMe investor achieved an annualized return (CAGR) of 6.2%, which is 4.2 percentage points more than the “Mixed Equity” category according to Inverco, which returned 2.0% over the same period.

These returns are undoubtedly exceptional both in absolute and relative terms compared to the reference index**, and we are satisfied because it fulfills one of the motivations that led us to create inbestMe: helping our clients invest better (achieve good returns) with high personalization.

* To make this calculation, we weight the number of “investor” clients per profile over the total. This considers the different profiles of index funds and ETFs ranging from 1 to 10. The savings portfolio, target portfolios, and bond portfolios are excluded from the average investor profile calculation.

** The reference index for profile 7/10 is the “Mixed Equity” category by Inverco.

Excellent returns of our index fund portfolios as of end of June 2025

Despite the semester’s volatility, all our diversified index fund and ETF standard portfolios posted positive returns in 2025 as of 30/06/2025. Diversified portfolios are designed for investors who want to invest long term. Their broad diversification across asset classes makes them resilient to most market conditions, and thanks to our optimal allocation, this was achieved once again in this complex semester.

Our main index fund (and ETF) portfolios have partial (but significant) currency hedging, which enabled this strong performance despite the depreciation of the dollar. Many managed portfolios from our direct competitors and the industry in general lack this, which has resulted in large performance gaps in favor of our portfolios.

As Warren Buffett once said: “Only when the tide goes out do you discover who’s been swimming naked.”

As shown in the chart above, returns ranged from 2.3% for profile 1 to 3.4% for profile 10. The average return of standard index fund portfolios was 2.9%, 1.5 percentage points higher than the weighted average return of investment funds, according to Inverco statistics.

Excellent returns of our standard ETF portfolios as of end of June 2025

At inbestMe, we build highly diversified portfolios using both index funds—generally preferred by Spanish tax residents due to tax deferral—and ETFs. Both options maintain similar risk levels and exposure for each investor profile, although returns may differ slightly since asset class availability is not exactly the same.

This semester, the standard ETF portfolios also performed excellently and, on average, slightly better than the index fund portfolios, achieving a return of 3.4%, 2 percentage points higher than the Inverco benchmark. Returns ranged from 1.9% (Profile 1) to 4.8% (Profile 10). The exceptional performance of gold contributed to this improved result.

This semester, the standard ETF portfolios also performed excellently, even outperforming the index fund portfolios on average, with a return of 3.4%, which is 2 percentage points higher than the Inverco benchmark. Returns ranged from 1.9% for Profile 1 to 4.8% for Profile 10. The exceptional performance of gold contributed significantly to this improved result (the index fund portfolios have no exposure to gold).

Overall excellent returns across all our portfolios as of end of June 2025

In the table below, we can see that standard dollar-denominated ETF portfolios achieved the best results this semester, with returns ranging from 4.5% for profile 1 to 8.7% for profile 10, with an exceptional average of 6.8%.

Value ETF portfolios also benefited from the stronger performance of value stocks during early 2025, with returns ranging from 1.5% for profile 1 to 6.2% for profile 10, with another exceptional average of 4.1% (keep in mind this is for half a year).

As shown in the chart above, the savings portfolios (1% to 2%), bond portfolios (-1.7% to 5%), and target portfolios (1.2% to 3.6%) also ended the semester in positive territory—except for the aggressive bond ETF portfolio.

Dollar-denominated portfolios in general achieved higher returns—ranging from 0.5 to 3 percentage points more—because interest rates in that currency remain higher.

SRI portfolios had somewhat weaker performance in the first semester, although on average they still ended in positive territory: +1.6% for the ETF version and +0.8% for the index fund version.

Portfolios under €5,000 did not benefit as much from diversification and currency hedging and ended slightly negative: -0.3% for the standard version and -1.6% for the SRI version. As a reminder, we recently made changes to these portfolios specifically to improve currency hedging.

Note that at inbestMe, portfolios under €5,000 are temporary transitional portfolios, designed to be progressively completed through regular contributions until they reach €5,000 and automatically switch to the fully diversified portfolio.

You can see more detailed performance analysis for other portfolios in the following list:

• Returns of the savings portfolio as of June 2025: the best alternative to bank deposits
• Target portfolios as of June 2025: predictable returns and excellent risk/return ratio
• Exceptional risk/return performance of inbestMe’s bond portfolios as of June 2025
• Excellent returns from dollar ETF portfolios through June 2025
• Excellent returns from inbestMe’s value ETF portfolios as of June 2025
• Positive average returns on SRI Portfolios but lower at the end of June 2025
• Strong returns for Pension Plan Portfolios despite a volatile environment at the end of June 2025

If you want to see more details on our portfolio returns (for this period or others, and for all portfolio types and risk profiles), you can visit the returns page on inbestMe’s website, where you’ll find comparisons with other benchmarks and risk metrics such as volatility, Sharpe ratio, and maximum drawdowns across different periods. This data is updated at the beginning of each month with figures through the end of the previous month.

Accumulated returns and CAGR as of end of June 2025

Our diversified portfolios of index funds and ETFs are designed for medium- and long-term investing, and that is the timeframe in which they should be analyzed.

In the chart below, we see a comparison of all our portfolio profiles with the different categories of Inverco’s mutual fund statistics in Spain from 2017 to the end of June 2025. This allows us to compare our portfolios with investment funds that cover the same asset classes and have similar risk profiles. Accumulated returns range from 10.2% for profile 1 to 98% for profile 10.

On average, our portfolios achieved an accumulated return of 52.5% compared to 19.9% from Inverco—a 32.6 percentage point difference. This means that for an investment of €100,000 on our platform, an investor would have €152,500 versus €119,900, a difference of €32,600. A difference that could mark a before and after for any investor.

In the profiles where most of our investors are concentrated, the average accumulated difference is 55.4%.

In the chart below, we see that our portfolios achieved an average annualized return (CAGR) of 4.9%, more than double the average return of investment funds in Spain (2.2%), a differential of 2.7 percentage points.

It is worth noting that for every risk profile, returns are significantly higher than their respective benchmark, meaning both low- and high-risk portfolios outperform their comparable investment fund averages.

In the profiles where most of our investors are concentrated (profiles 6 to 9), the differential in CAGR is 4.7 percentage points.

These returns are, on average, in line with long-term expectations but:

• are above expectations, especially in profiles 7 to 10,
• while lower-risk profiles are below expectations.

Accordingly, some moderation in the higher profiles and a recovery in the lower ones would be expected.