Strategy Note

The first three quarters of 2025 are now complete, and markets enter the final stretch of the year with a strong finish from key growth and international segments. GLDM, SPDR Gold MiniShares Trust, was the clear standout — up 47% year-to-date, outperforming both equities and bonds. Gold’s strength reflects ongoing diversification and hedging themes amid persistent geopolitical uncertainty and expectations for lower real yields.

Among equities, EEM (iShares MSCI Emerging Markets ETF) surged 27.8% YTD, followed by EFA (iShares MSCI EAFE ETF) at 23.5%, signaling the continued leadership of non-U.S. markets in 2025. The performance of GLDM, EEM, and EFA relative to U.S. benchmarks reinforces the de-dollarization narrative that has been increasingly discussed by global strategists.

In U.S. markets, small caps represented by IWM staged a notable rebound, gaining 12.1% in Q3 though still trailing large-cap benchmarks year-to-date. Growth stocks continued to outperform value, with VUG outpacing VTV across all periods (1-month, 3-month, and YTD), defying early-year expectations of value dominance. Healthcare (XLV) led all U.S. sectors this week with a strong 6.6% gain, boosted by rotation into defensive growth areas. Utilities (XLU) also rallied over 2%, while Communication Services (XLC) and Consumer Discretionary (XLY) lagged. Looking ahead, the focus turns to the Q4 earnings season with key reports due from Constellation Brands (STZ), McCormick & Company (MKC), AZZ Inc. (AZZ), Applied Digital (APLD), and Apogee Industries (APOG).

ValuEngine projects APLD as the standout, with a 13.2% 12-month forecasted gain versus 3.2% for SPLG (S&P 500 ETF). While APLD earns a VE Rating of 5 (Strong Buy), it also carries high volatility and overvaluation risks. Among larger caps, UBS and Disney (DIS) both receive Strong Buy ratings and are considered undervalued by our model. With the fourth quarter now underway, market attention will center on earnings guidance, interest rate expectations, and the potential continuation of the rotation into defensive and international assets.

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