Markets, Moves & Mana: Q3 2025 Insights
Asset Class Performance
After one of the strongest stretches for global markets in recent years, the third quarter of 2025 offered investors a moment to pause and reflect. U.S. equities continued their advance, supported by resilient growth and easing inflation pressures, while international and emerging markets added meaningful breadth to performance. Fixed income provided modest but stabilizing returns, and alternative assets continued to diversify portfolios.
Year to date emerging markets (+27.5%) and non-U.S. equities (+25.3%) have led global performance, while U.S. large caps (+14.6%) and infrastructure (+18.9%) added strong returns. Fixed income categories remain positive, led by global high yield (+9.6%) and US bonds (6.1%). Muni bonds saw a recovery in the 3rd quarter, bringing YTD returns to 3.7%.
Source: Russell Investments Q3 2025 Economic & Market Review. U.S. Small Cap: Russell 2000® Index; U.S. Large Cap: Russell 1000® Index; Non-U.S.: MSCI World ex-USA Net index; Infrastructure: S&P Global Infrastructure Index; Global High Yield: Bloomberg Global High Yield Index; Global REITs: FTSE EPRA/NAREIT Developed Index; Municipals: Bloomberg Municipal 1-15 Yr. Blend Index, Cash: Bloomberg 1-3 Yr US Treasury Index; EM Equity: MSCI Emerging Markets Index; U.S. Bonds: Bloomberg U.S. Aggregate Bond Index; Balanced Index: 3% U.S. Small Cap,36% U.S. Large Cap,13% Non-U.S., 2% Infrastructure, 4% Global High Yield, 2% Global REITs, 2% Cash, 4% EM Equity, 34% U.S. Bonds. Index returns represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment. Indexes are unmanaged and cannot be invested in directly.
Investment Commentary & Outlook
The AI Bubble or the Beginning of a New Industrial Revolution?
No topic has dominated market conversation this year more than artificial intelligence. Every major index, headline, and quarterly earnings call seems to revolve around it. To some, this looks like a bubble; to others, the beginning of a generational transformation. The truth likely lies somewhere in between.
Why It’s Being Called a Bubble
Valuations in AI-linked companies have reached extremes that recall prior periods of euphoria. The Yale School of Management recently described how many AI-adjacent firms are propping themselves up more on narrative than on earnings power, a dynamic not unlike the late 1990s dot-com boom. We shouldn’t dismiss that risk. There will be periods when expectations overshoot reality, when the rate of capital investment outpaces the pace of adoption, and when today’s market darlings are repriced more realistically. That’s how progress tends to work: unevenly, with bursts of enthusiasm followed by consolidation.
AI-related capital spending has soared toward $1 trillion, and chip production capacity is now sufficient to support a 25x increase in chatbot usage. The question skeptics raise is whether real-world monetization will justify those costs. Like the fiber buildout of the 1990s, there’s a risk that supply gets ahead of demand.
Why It Might Be the Start of Something Bigger
Still, beneath the noise is something much more enduring. AI is already reshaping workflows, decision-making, and productivity across industries. Businesses are moving from pilot projects to integration, and adoption data show this trend accelerating. While it’s true that monetization lags adoption, the economic upside is staggering: even modest productivity gains translate into trillions of potential value creation over time.
UBS research estimates that if AI automates roughly one-third of global work tasks and captures even 10% of the associated economic value, it could generate $1.5 trillion in annual revenues. Early adoption data already suggest momentum: U.S. business AI adoption has grown from 9.2% to 9.7% in Q3, on track to reach 10% by year-end. This is a milestone that historically signals the start of exponential growth (smartphones hit that same inflection point in year three). AI today is in its adoption phase rather than its monetization phase. Companies are investing heavily to integrate AI into workflows, and history shows that once usage becomes embedded, monetization follows. Alphabet, for instance, attributed a “material portion” of its 27% cloud growth this year to AI workloads, and JPMorgan’s CEO recently noted that its $2 billion annual AI investment is already yielding equivalent cost savings.
In other words, this isn’t just another technology cycle, it’s an infrastructure cycle. One that will likely unfold over decades, not quarters. While fear of ‘getting in at the top’ is understandable, history argues otherwise. For example, WisdomTree data show that the net income of the top tech companies has grown more than 5x over the past 25 years, from under US $100 billion in 2000 to more than US $500 billion today, underscoring that this large asset-class shift can compound significantly. That kind of transformation isn’t easily timed, which is why staying invested often matters more than perfect timing.
Long-Term Market Outlook: A Decade of Balance Ahead
Each year, JPMorgan publishes its Long-Term Capital Market Assumptions (LTCMA), a data-driven projection of how global asset classes may perform over the next 10–15 years. The 2026 edition arrives at an encouraging conclusion: after years of suppressed yields and concentrated equity leadership, the investment landscape has reset into a healthier balance.
Returns over time are shaped by where you begin: today’s yields, prices, and expectations. After two years of rising rates and more moderate equity valuations, today’s landscape gives investors the best foundation for long-term returns in more than a decade:
Global Equities: Expected to return 6.5–7.0% annually over the next 10–15 years, roughly in line with their long-term average. U.S. equities are projected slightly lower (~6.3%), while non-U.S. developed and emerging markets offer modestly higher potential (~7–8%) due to more attractive starting valuations.
Fixed Income: U.S. core bonds are forecast to deliver 4.8–5.2% returns, with high yield and emerging market debt expected to earn 6–7%. These are levels not seen since before the Global Financial Crisis—reminding investors that bonds once again yield something meaningful.
Real Assets: Infrastructure, real estate, and listed utilities are projected to provide 6–8% returns, offering inflation-sensitive diversification that complements both stocks and bonds.
Inflation: Long-term inflation expectations have stabilized near 2.3%, consistent with a “normalized but not overheated” economy.
One of the most important messages from JPMorgan’s work is that diversification is working again. For much of the 2010s, stocks and bonds moved together, limiting the benefits of asset allocation. But with policy rates normalized, the equity–bond correlation has reverted toward neutral, allowing traditional 60/40 or balanced portfolios to regain their risk-management power. JPMorgan’s base case shows a balanced portfolio (roughly 60% equities, 40% bonds) could reasonably return 5.6–6.0% annually over the next decade—a healthy expectation that balances income and growth.
The LTCMA also highlights the four structural forces shaping the decade ahead:
Productivity Renaissance: The AI revolution and diffusion of automation across industries are projected to boost productivity growth globally by 0.3–0.5 percentage points per year.
Energy Transition: Massive investment in renewables, grid infrastructure, and storage will create multi-trillion-dollar capital flows.
Demographics and Fiscal Policy: Aging populations and high government debt will challenge policymakers but also drive innovation in healthcare, robotics, and longevity solutions.
Fragmented Globalization: Supply chains are becoming more regionalized, leading to higher resilience but also higher baseline inflation and new opportunities in emerging markets.
The conclusion is straightforward: this is an investor’s market, not a speculator’s one. Yields are back. Diversification matters again. And patience, the rarest commodity in markets, is finally being rewarded.
For long-term investors, these assumptions reinforce a simple truth: starting conditions matter. With income opportunities restored and valuations more reasonable, balanced portfolios are entering one of the most attractive forward-looking environments in more than a decade.
Closing Thoughts: Investing at All-Time Highs
We often hear a familiar concern when markets reach new highs: “Isn’t it too late to invest?” The data suggest otherwise. As the Kitces and Clearnomics research illustrates, investors who commit capital at prior market peaks have still historically achieved strong long-term returns. The key determinant isn’t when you invest, it’s whether you stay invested.
Yes, valuations in parts of the market are elevated, and headlines about bubbles abound. But markets make new highs for a reason: earnings are growing, innovation is expanding, and capital is compounding. For investors with a plan, time in the market continues to trump timing the market.
After a remarkable year, our tone is one of measured optimism. The past few quarters have rewarded patience and discipline. As we look toward 2026, our focus remains steady: stay diversified, rebalance with purpose, and participate confidently in the next chapter of growth.
This commentary is provided for informational and educational purposes only and should not be construed as investment advice or a recommendation. The opinions expressed are those of Mana Financial Life Design as of the date of publication and are subject to change. All investing involves risk, including possible loss of principal.
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Stephanie Bucko and Cristina Livadary are fee-only financial planners based in Los Angeles, California. Stephanie is the Chief Investment Officer and Cristina is the Chief Executive Officer at Mana Financial Life Design (FLD). Mana FLD provides comprehensive financial planning and investment management services to help clients grow and protect their wealth throughout life’s journey. Mana FLD specializes in advising ambitious professionals who seek financial knowledge and want to implement creative budgeting, savings, proactive planning and powerful investment strategies. As fee-only fiduciaries and independent financial advisors, Stephanie and Cristina never receive commission of any kind. Stephanie and Cristina are legally bound by their certifications to provide unbiased and trustworthy financial advice.