It has often been said that success and happiness lie within the journey rather than at the destination. For small cap investors, 2025 was a turbulent and twisting ride whose volatile journey fortunately ended with a successful outcome. After the 2024 Presidential election, equity markets rallied as many investors assumed the new administration’s focus on lower regulation and taxes would be beneficial to growth. Underlying economic activity was supportive of this conclusion, driven by consistent employment growth, better inflation trends and increased consumer activity.
Natural capital has long been seen as an effective portfolio diversifier for investors, offering an attractive balance of environmental and income characteristics. However, entering these markets has proved challenging for many.
The resilience of the US economy never fails to amaze me. Despite all the turmoil in the world, the US economy somehow manages to look past it, power through it, and come out stronger on the other side.