October 2025 Asset Class Performance: US Stocks Regain Leadership Amid Global Market Rotation

This analysis is based on the Seeking Alpha report [1] published on November 3, 2025, which reviewed October 2025 performance across major asset classes using ETF benchmarks.

The October 2025 performance data reveals a significant market rotation, with US stocks regaining leadership among major asset classes for the first time in five months [1]. This shift marks a notable departure from the sustained foreign market dominance that characterized much of 2025. Vanguard Total US Stock Market (VTI) gained 2.60% in October, outperforming both developed markets (VEA) at +1.28% and emerging markets (VWO) at +1.14% [0].

The domestic equity outperformance was driven primarily by large-cap technology stocks, with the NASDAQ Composite posting the strongest gain at +4.75%, followed by the S&P 500 at +2.30% and Dow Jones Industrial at +2.26% [0]. However, the Russell 2000’s slight decline of -0.15% indicates a divergence between large and small-cap performance, suggesting the rotation may be concentrated in specific market segments [0].

Despite October’s US stock leadership, foreign markets maintain commanding year-to-date leads through October 2025. Developed markets (VEA) lead with +27.20% gains, followed closely by emerging markets (VWO) at +24.96%, while US stocks (VTI) trail at +15.09% [0]. This substantial performance gap suggests that October’s US outperformance may represent a temporary rotation rather than a structural shift in market leadership.

The analysis reveals significant divergence across asset classes:

• Gold (GLD) showed robust October performance at +3.36%, with a year-to-date price range of 13.63% [0]
• US Bonds (BND) provided modest positive returns at +0.35% in October [0]

• US Real Estate (VNQ) continued its weakness with a -2.40% decline in October and minimal year-to-date gains of only 0.10% [0]
• Current sector performance shows broad weakness with 8 out of 11 sectors declining, led by Basic Materials (-2.19%) and Communication Services (-1.92%) [0]

Gold’s strong October performance (+3.36%) [0] alongside its substantial year-to-date range suggests investors are increasingly seeking safe-haven assets. This trend may reflect underlying concerns about market volatility, geopolitical tensions, or inflation expectations, potentially indicating a risk-off sentiment despite overall positive asset class returns.

The persistent underperformance of US real estate (VNQ) represents a significant anomaly in the otherwise positive 2025 market environment. With only 0.10% year-to-date gains [0] and continued monthly declines, the sector faces unique challenges potentially related to interest rate sensitivity, valuation concerns, or economic growth expectations.

The divergence between large-cap outperformance and small-cap underperformance, combined with current broad sector weakness (8 declining sectors) [0], raises questions about the sustainability of the October US stock rally. This narrow leadership suggests the market may be driven by specific factors rather than broad-based strength.

1. Real Estate Sector Exposure
   : The continued weakness in US real estate (VNQ) with only 0.10% year-to-date gains [0] presents significant risk for portfolios with substantial real estate allocations.

2. Small-Cap Vulnerability
   : The Russell 2000’s negative October performance (-0.15%) [0] indicates potential stress in small-cap stocks, which could signal broader market concerns.

3. Sector Concentration Risk
   : The heavy reliance on large-cap technology stocks for US market outperformance creates concentration risk, particularly if technology sector momentum reverses.

1. International Market Momentum
   : Foreign markets’ substantial year-to-date leads (developed +27.20%, emerging +24.96%) [0] suggest continued opportunities in international equities.

2. Safe-Haven Allocation
   : Gold’s strong performance (+3.36% in October) [0] indicates ongoing demand for defensive assets, potentially offering portfolio diversification benefits.

3. Relative Value Opportunities
   : The October rotation suggests potential relative value opportunities in US equities after months of underperformance relative to international markets.

The October 2025 asset class review reveals a complex market environment characterized by rotational dynamics rather than sustained leadership trends. While US stocks achieved monthly leadership with VTI gaining 2.60% [0], foreign markets maintain substantial year-to-date advantages. The market shows signs of narrow leadership with technology-driven large-cap gains contrasting with small-cap weakness and broad sector declines [0].

All major asset classes have posted positive returns in 2025, but performance varies significantly across categories. The persistent weakness in US real estate and the strength in safe-haven assets like gold suggest underlying market concerns despite overall positive returns [0]. The divergence between monthly and year-to-date performance patterns indicates that October’s US stock outperformance may represent tactical rotation rather than structural change.

Decision-makers should consider these rotational dynamics while monitoring the sustainability of current trends, particularly the divergence between large and small-cap performance and the ongoing challenges in the real estate sector.