As we approach the final quarter of 2025, investment performance may not be aligning with initial forecasts.
Source: Investing.com
FT Alphaville’s Friday Quiz vs. Real-World Market Trends
Every Friday, FT Alphaville, the Financial Times’ daily blog, hosts a light-hearted competition offering a modest prize, often just a T-shirt. The challenge typically involves three cryptic graphs, each posing the same question: What’s being plotted? The answers are often obscure; recent examples included an Argentinian government bond and two types of debt from First Brands, a U.S. auto parts company that had recently collapsed in dramatic fashion.
In contrast, the graph above is far more straightforward. It tracks the performance of three exchange-traded funds (ETFs) over the first nine months of 2025:
Every Friday, FT Alphaville, the Financial Times’ daily blog, hosts a light-hearted competition offering a modest prize, often just a T-shirt. The challenge typically involves three cryptic graphs, each posing the same question: What’s being plotted? The answers are often obscure; recent examples included an Argentinian government bond and two types of debt from First Brands, a U.S. auto parts company that had recently collapsed in dramatic fashion.
In contrast, the graph above is far more straightforward. It tracks the performance of three exchange-traded funds (ETFs) over the first nine months of 2025:
- A gold ETF
- A FTSE 100 ETF (with dividends reinvested)
- An S&P 500 ETF (also with dividends reinvested)
All three ETFs are from the same provider, priced in U.S. dollars, and rebased to 100 as of the end of 2024 for consistency. Your task: identify which line represents which ETF.
The results may surprise you.
By the end of Q3 2025, the top performer was the gold ETF, up 47.0%. In second place was the FTSE 100 ETF, gaining 18.9%, while the S&P 500 ETF lagged behind with a 13.1% increase. If you’re surprised to see the U.S. market trailing, you’re not alone.
There are many possible explanations, but one word captures the essence: dollar.
In 2025, confidence in the U.S. dollar has waned. Global investors have grown uneasy in a climate where sweeping tariffs, sometimes 25% or more, can be announced via a weekend post on Truth Social, Donald Trump’s social media platform. This unpredictability has led to dollar sell-offs and increased currency hedging by foreign investors holding U.S. assets. Central banks, too, have shown less interest in holding dollars, turning instead to gold as a more stable reserve asset.
For individual investors, the takeaway is clear:
Currency matters. Even though the U.S. stock market continues to hit record highs, the weakening dollar has diluted returns for non-U.S. investors.
As always, investing in equities should be viewed as a long-term strategy, aligned with your personal risk tolerance and financial goals. Market values and income can fluctuate, and investors may not recover their initial investment, even with tax advantages.
While ISAs and other tax-efficient wrappers can help, it’s important to remember that tax treatment depends on individual circumstances and may change. Also, note that the Financial Conduct Authority does not regulate tax advice.
7th November 2025
