How did Financial Markets do?
Global equities continued to rally in the third quarter, with the tariff and geopolitics-induced volatility earlier this year seemingly in the rear view mirror. In the U.S., large cap growth stocks resumed their AI-fueled rally, only to be upstaged by surging U.S small caps which rose in anticipation of the first Fed rate cut of 2025 and on strong economic results which bolstered cyclical sectors such as technology, materials, and industrials. International stocks also advanced led by Japan which saw a weaker Yen support export-oriented companies. Emerging markets stocks rose sharply as easing trade tensions benefited China and Taiwan.
Bonds edged higher in the quarter as yields generally trended lower and markets shifted their focus from inflation to the Fed and a cooling labor market. The Fed delivered the first of two expected 2025 rate cuts in mid-September, with the second expected at the end of October. Credit spreads remained tight as trade tensions de-escalated, corporate earnings remain strong, and a resilient macroeconomic backdrop persists.
Figure 1: Market performance (ranked by Q3 2025 total return)
Disclosures
Source: Morningstar Direct, as of September 30, 2025.
Performance figures shown are total returns for each asset class during the designated period. Indexes used are: High-yield bonds, Bloomberg High Yield Very Liquid Index; U.S. Treasuries, Bloomberg U.S. Treasury 3-7 Year Bond Index; Emerging markets bonds, Bloomberg Emerging Markets Local Currency Government Bond Index; Treasury Inflation-Protected Securities, Bloomberg TIPS Index; Emerging markets stocks, MSCI Emerging Markets Index; Investment-grade corporate bonds, Bloomberg U.S. Credit Index; U.S. large cap stocks, S&P 500® Index; International developed market small cap stocks, MSCI EAFE Small Cap Index; Securitized Bonds, Bloomberg Securitized Index; Municipal bonds, Bloomberg Municipal Index; International developed market large cap stocks, MSCI EAFE Index; U.S. small cap stocks, Russell 2000® Index; U.S. real estate investment trusts, S&P United States REIT Index. Past performance does not guarantee future results. Indexes are unmanaged, do not incur management fees, costs and expenses, and cannot be invested in directly.
How did Schwab Intelligent Portfolios do?
All Intelligent Portfolios delivered positive returns in the quarter as every asset class advanced. Strength across both U.S. and international stocks and bonds led to very similar returns in both Global and U.S.-focused portfolios. Fundamental indexing added meaningfully to returns within international large cap equities in the 3rd quarter, but the surge in growth-oriented sectors aided market cap indices in the U.S.
Looking ahead
The Intelligent Portfolios are designed to help our clients achieve their objectives over the long term. While this quarter saw its share of volatility, we know that creating and sticking to a plan, maintaining a diversified approach to investing, and not overreacting to current events gives investors the best chance of achieving their objectives. We have many resources available designed to help you achieve your investment goals and we're always available by phone to answer any questions you may have.
Thank you—we look forward to continuing to serve you in the coming quarters and years ahead.
1This quarterly commentary is designed to provide you with insight into the market environment during the quarter. How your portfolio performed is dependent upon your asset allocation across the risk spectrum from conservative to aggressive, as well as criteria such as when you opened your account, the timing of any deposits/withdrawals, timing of portfolio rebalances, whether you are enrolled in tax-loss harvesting and other criteria.
Please read the Schwab Intelligent Portfolios Solutions disclosure brochures for important information, pricing, and disclosures related to the Schwab Intelligent Portfolios and Schwab Intelligent Portfolios Premium programs.
Schwab Intelligent Portfolios® and Schwab Intelligent Portfolios Premium® are made available through Charles Schwab & Co., Inc. ('Schwab'), a dually registered investment adviser and broker-dealer. Portfolio management services are provided by Charles Schwab Investment Management, Inc. ("CSIM"). Schwab and CSIM are subsidiaries of The Charles Schwab Corporation.
Schwab Intelligent Portfolios® and Schwab Intelligent Portfolios Premium® are designed to monitor portfolios on a daily basis and will also automatically rebalance as needed to keep the portfolio consistent with the client's selected risk profile. Trading may not take place daily.
Tax‐loss harvesting is available for clients with invested assets of $50,000 or more in their account. Clients must choose to activate this feature.
Diversification, asset allocation, automatic investing and rebalancing strategies do not ensure a profit and do not protect against losses in declining markets.
Indexes are unmanaged, do not incur management fees, costs and expenses, and cannot be invested in directly. For more information on indexes please see https://www.schwab.com/indexdefinitions.
Past performance is no guarantee of future results, and the opinions presented cannot be viewed as an indicator of future performance.
Investing involves risk, including loss of principal.