2025 Market Performance Differential: Developed Ex-U.S., U.S. Small-Caps, and Gold

Based on a Seeking Alpha article [1] published on December 16, 2025, the past 12 months have seen a notable performance differential across key market segments. Internal market data [0] quantifies these trends:

• Developed ex-U.S. markets (tracked by EFA ETF) returned 20.57%.
• U.S. small-caps (Russell 2000 index) lagged with a 6.95% return.
• U.S. large-caps (S&P 500) achieved a 11.61% return.
• Gold (GLD ETF) delivered a standout 61.42% return, outperforming all equity segments.
  The differential between developed ex-U.S. and U.S. small-cap performance reached 13.62%, marking a significant divergence in market dynamics over the period. Gold’s exceptional return, highlighted in the article, suggests strong investor demand for the precious metal, potentially driven by inflation concerns or safe-haven behavior. The article’s full analysis and the specific drivers behind gold’s rally are not fully available due to a crawling failure, creating information gaps in understanding the complete context.

1. The 13.62% performance gap between developed ex-U.S. markets and U.S. small-caps indicates a substantial shift in investor preferences away from U.S. small-caps towards developed international markets.
2. Gold’s 61.42% return is historically exceptional, signaling heightened concerns about economic stability or inflation that may not be fully reflected in equity markets.
3. The gap between U.S. large-caps (11.61%) and small-caps (6.95%) also suggests a change in the “size premium,” with larger U.S. firms outperforming smaller counterparts over the period.

• Gold’s rally may be unsustainable if the underlying drivers (e.g., inflation, geopolitical tensions) abate, potentially leading to a sharp correction [0].
• U.S. small-caps could face further underperformance if economic conditions worsen or interest rates remain elevated, as they are more sensitive to domestic economic headwinds [0].
• Developed ex-U.S. markets may encounter risks from currency fluctuations, global trade tensions, or regional economic slowdowns [0].

• Strategic portfolio reallocations may capitalize on the momentum in developed ex-U.S. markets, but this requires close monitoring of underlying economic and policy factors [0].
• The gold rally may present short-term opportunities for investors seeking diversification, though long-term sustainability remains uncertain [0].

The 2025 market landscape has been characterized by significant performance differentials across segments: developed ex-U.S. markets outperformed U.S. small-caps by 13.62%, gold delivered an exceptional 61.42% return, and U.S. large-caps outperformed U.S. small-caps. These trends highlight shifting investor preferences and potential concerns about economic stability or inflation. Key factors to monitor include global economic data (GDP, inflation), central bank policies (interest rates), and geopolitical events that could influence safe-haven demand and market segment performance.