Baird Q1 2025 International And Global Growth Funds Commentary And Market Outlook

2025-05-22 08:05:00 ET

Summary

• Global equity markets diverged in Q1 2025, with U.S. equities underperforming due to aggressive tariffs and geopolitical tensions, while Europe and China showed resilience.
• Our investment strategy emphasizes long-term secular growth trends, strong competitive advantages, and robust financials to withstand macroeconomic shocks and outperform over the cycle.
• We remain overweight in Greater China and international equities, as valuations are attractive and our holdings are positioned in secular growth areas aligned with government priorities.
• Despite ongoing global uncertainty and tariff risks, our conviction-weighted, diversified portfolios are designed to capitalize on enduring growth themes and mitigate external shocks.

MARKET RECAP

Global equity markets diverged significantly in the first quarter. Aggressive U.S. tariff policies and rising geopolitical tensions played an outsized role and heightened fears of disrupted global supply chains, increased input costs, and slower overall economic growth. This led to substantial volatility and dispersion across global markets. U.S. equities suffered their worst quarterly decline since 2022, while international markets exhibited relative resilience. Europe’s performance benefited from substantial fiscal stimulus, notably Germany’s €500 billion infrastructure program and the European Union’s expansive €800 billion defense spending plan, combined with accommodative monetary policy from the European Central Bank (ECB). Meanwhile, China’s markets were buoyed by renewed optimism in technology sectors....

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