Monthly investment portfolio brief

Thankful for returns — but  focused on risk management

What you need to know

• Mixed headlines led to mixed October returns, but generally well-diversified portfolios have much to be grateful for over one- and three-year periods.
• Focusing solely on returns can be risky, particularly as markets face higher valuations and unsettling economic and political headlines.
• Focus on risk management, incorporating global diversification, systematic investing and rebalancing strategies to help keep you on track.
• Instead of chasing performance, incorporate a diverse set of timely market opportunities, actively managing portfolio risks to help avoid unwanted performance surprises.
• Consider overweighting equity investments across domestic and international markets, reallocating from a variety of bond allocations. 
  
   

Portfolio tip

Strong performers can lead to portfolio imbalances, potentially placing your financial goals at risk. Trimming winners and adding to laggards can help prevent your portfolio from wandering too far from its objectives. 

Where have we been?

Mixed headlines led to mixed market returns in October. While markets largely shrugged off the U.S. government shutdown that began Oct. 1, they became shaky as trade tensions between the U.S. and China escalated. Despite initial threats of tighter trade controls, progress later in the month helped restore some calm in markets. 

Separately, the Federal Reserve cut interest rates for the second consecutive month to help protect labor markets. The central bank also indicated one more rate cut this year isn’t guaranteed, causing concerns that interest rates may remain higher for longer, pressuring more economically sensitive markets. On a brighter note, earnings and partnership announcements within tech boosted markets, particularly those with significant technology exposure.

With a blend of market-moving headlines, returns varied across asset classes. Emerging-market equity, with its meaningful exposure to China and the tech sector, led gains, followed closely by tech-heavy U.S. large-cap stocks. 

Despite the late-month rise in rates, all bond asset classes finished in positive territory. In contrast, some cyclical and rate-sensitive segments — such as U.S. mid-cap and international small- and mid-cap stocks — fell slightly. 

Over a one-year horizon, strong market gains have treated well-diversified portfolios nicely. Heightened policy uncertainty caused a turbulent start to 2025, but markets staged an impressive recovery, rewarding well-balanced portfolios. Today, all our recommended asset classes sit comfortably higher from a year ago, delivering returns to be grateful for. With cash trailing, it’s a timely a reminder to stay invested despite what fear may suggest.

Lower interest rates, rising corporate profits, resilient economic growth, easing trade tensions and fiscal policy boosts fueled the strength across global markets. Technology stock leadership across regions — with some tech sectors returning 35%–50% — added momentum, while a weakening dollar helped propel international stock asset classes into the forefront. 

Over a three-year horizon, portfolios have plenty to be thankful for. 2022 was challenging for investment portfolios as central banks hiked interest rates to tame elevated inflation, causing stock and bond markets to fall. U.S. large-cap stocks fell into bear market territory as they headed toward their October low, but a new bull market then emerged.

Three years later, that bull market continues in full force. U.S. large-cap stocks have topped the charts, returning nearly 23% per year on average. Impressively, all other stock asset classes have posted average annual returns of 11%–22%, which is well above long-term expectations and worthy of celebration. But keep in mind this performance may not be repeated in the future.  

While equities have outpaced fixed income, bonds have also help lift well-diversified portfolios. Interest rates have trended lower, and credit spreads have remained contained amid resilient growth, driving above-average bond returns, particularly within lower-quality asset classes. 

What do we recommend going forward?

Help safeguard your financial goals with disciplined risk-management strategies. As we close out 2025, investors have much to appreciate, including solid market returns and the remarkable bull market that’s lasted three years and counting. While we don’t foresee an end to the bull market in 2026, its path is unlikely to be smooth, and market leadership is likely to rotate. While you can’t control the markets, you can control how much risk your portfolio is taking. 

With markets facing higher valuations and ongoing headlines around global trade, government spending, slowing growth and central bank policy, consider these four essential strategies to help keep your financial goals on track amid the uncertainties: 

1. Stay diversified globally — Instead of trying to guess when market leadership will shift, maintain exposures to stocks of various regions, sizes, styles and sectors, as well as to bonds of various regions, maturities and credit quality, to help you benefit from emerging top performers.
2. Rebalance when appropriate — However you choose to rebalance, trimming your winners and adding to your laggards can help prevent your portfolio from wandering too far from its objectives and taking on too much risk.
3. Invest systematically — Automatic contributions, dollar-cost averaging, and dividend reinvestment programs allow you to invest at regular intervals and maintain discipline through market fluctuations. It’s a simple yet powerful way to build wealth without having to think, particularly as the growth of your money compounds over a long period.
4. Lean on your financial advisor — You don’t have to manage portfolio risk alone. Talk with a trusted financial professional to help execute a strategy designed around your financial goals, ensuring the risks in your portfolio are intentional and well-understood.

Enhance your return potential while managing active risks. Chasing hot, trendy investments can be tempting, particularly when facing the fear of missing out. But in our view, a focus on returns alone is not only simplistic, but can be risky, particularly when looking into the rearview mirror. Strong performers can lead to portfolio imbalances, creating the potential for unwanted surprises in your portfolio’s performance and misalignment from your risk and return objectives. 

Instead of chasing performance, anchor to an investment strategy built upon diversified, strategic allocations across our 11 recommend asset classes and aligned with your comfort with risk and financial goals. From that starting point, consider actively incorporating market opportunities that may enhance return potential without taking unintentional risk, such as by:

1. Leaning into equity  — Despite the potential for periodic volatility, we expect lower interest rates and improving business confidence should help generate solid economic growth, supporting equities more than fixed income. We recommend a globally diversified approach to overweighting equity to help manage valuation, concentration, and regional and currency risks in your portfolio.
2. Overweighting larger U.S. stocks — U.S. large- and mid-cap stocks are likely to benefit from their higher quality as U.S. growth moderates before reaccelerating in 2026. U.S. large caps offer strong momentum and exposure to ongoing tech innovations. U.S. mid caps offer cyclical catch-up potential as leadership broadens amid continued economic resilience.
3. Overweighting cyclical international stocks — We recently raised emerging-market equity and international small- and mid-cap stocks to overweight, favoring their more cyclical nature when compared to international large-cap stocks. We believe their momentum may continue amid attractive valuations, supportive policy shifts, easing trade tensions, potential dollar weakness and ongoing tech-driven growth.
4. Overweighting a diverse set of growth, cyclical and defensive sectors — We expect leadership to broaden beyond the tech sector and recommend overweighting consumer discretionary, health care and industrials. In our view, improving macro conditions are likely to support their earnings growth potential, and relatively attractive valuations provide catch-up potential, particularly as some policy risks subside.

We’re here for you

Strong portfolios are built on strategy rather than luck or reactions. And when properly executed, that strategy can keep you goal-focused. 

When you have a financial goal in mind, don’t chase trends that could put your goal at risk. Talk with your financial advisor about building a goal-oriented investment strategy and ensuring your portfolio is well-aligned, helping remove unwanted surprises in its performance that could take you off track. 

If you don’t have a financial advisor, we invite you to meet with an Edward Jones financial advisor to help design an investment strategy for your needs, backed by key risk management strategies to help safeguard what matters most to you.

Strategic portfolio guidance

Defining your strategic investment allocations helps keep your portfolio aligned with your risk and return objectives, and we recommend taking a diversified approach. Our long-term strategic asset allocation guidance represents our view of balanced diversification for the fixed-income and equity portions of a well-diversified portfolio, based on our outlook for the economy and markets over the next 30 years. The exact weightings (neutral weights) to each asset class will depend on the broad allocation to equity and fixed-income investments that most closely aligns with your comfort with risk and financial goals.

Diversification does not ensure a profit or protect against loss in a declining market.

Opportunistic portfolio guidance

Our opportunistic portfolio guidance represents our timely investment advice based on current market conditions and a shorter-term outlook. We believe incorporating this guidance into a well-diversified portfolio may enhance your potential for greater returns without taking on unintentional risks, helping keep your portfolio aligned with your risk and return objectives. We recommend first considering our opportunistic asset allocation guidance to capture opportunities across asset classes. We then recommend considering opportunistic equity style, U.S. equity sector and U.S. investment-grade bond guidance for more supplemental portfolio positioning, if appropriate.