International Equity Performance Review: Q3 2025
Global Markets Surge: Earnings, AI, and Policy Shifts Drive International Equity Gains
Third Quarter Market Dynamics: Growth Drivers and Underperformance Factors
During the third quarter of 2025, global equity markets experienced a notable upturn. This positive movement was largely propelled by strong corporate financial results, substantial investments in artificial intelligence infrastructure, and a more dovish approach from the U.S. central bank regarding monetary policy. These elements combined to enhance investor confidence and broaden risk appetite. Conversely, the Hartford International Opportunities Fund (I Share) trailed the MSCI ACWI ex-USA Index. A primary reason for this was the strategic positioning across various sectors, which, despite being a result of meticulous stock selection, ultimately hindered its performance. Specifically, a reduced exposure to the materials sector weighed on returns, although this was somewhat mitigated by an increased allocation to communication services.
Economic Headwinds and Tailwinds: Inflation, Trade, and Sectoral Impacts
The quarter also saw international equity markets deliver positive returns, buoyed by the resilience of corporate profits and signs of stabilizing inflation. A reduction in trade hostilities further supported market sentiment. However, the fund's sector allocations, derived from its fundamental stock-picking strategy, negatively affected its performance. While an underweight position in the materials sector was a detractor, the overweight in communication services offered some compensatory benefits.
