How did Financial Markets do?
Stocks capped off a stellar 2025 with solid returns in the 4th quarter, with international stocks leading the way as they did for much of the year. International large cap fundamental stocks were best performing asset class in the Schwab Intelligent Portfolios investment universe for both the 4th quarter and for all of 2025. U.S. stocks posted solid gains and saw a broadening of returns beyond the tech sector, with the healthcare sector leading the way and value stocks edging growth.
The U.S. Federal Reserve delivered two of their three 2025 rate cuts in the 4th quarter, which steepened the yield curve and provided a tailwind for bond returns. Spreads for investment grade and high yield corporate bonds remained near historic lows, reflecting investor optimism for the health of U.S. companies. International emerging market bonds saw the highest return within bonds for the quarter and year, fueled by a falling U.S. dollar and lower interest rates.
Figure 1: Market performance (ranked by Q4 2025 total return)
Disclosures
Source: Morningstar Direct, as of December 31, 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 Schwab Intelligent Portfolios rose in the quarter due to gains in the vast majority of asset categories. Global portfolios edged their U.S.-Focused counterparts on the strength of both international stocks and bonds. Fundamental indexing outperformed market cap indices in U.S. and international large cap, and international small cap in the quarter.
Looking ahead
Schwab Intelligent Portfolios is 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 disclosure brochure at Schwab.com/transparency/advisory for important information, pricing, and disclosures relating to the Schwab Intelligent Portfolios program.
Schwab Intelligent Portfolios is 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 is 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.