Adviser-to-client template: Lessons from 2025

For financial advisers to use with clients.

This document is intended to support your service proposition to clients. It is produced by our investment writers with a deliberately light tone and structure. However, these are guidance paragraphs only. It is not guaranteed to meet the expectations of regulators or your internal compliance requirements. If you wish to remove or amend any wording, you are free to do so. However, please bear in mind that you are ultimately responsible for the accuracy and relevance of your communications to clients.

Dear Client,

We say it every year, but 2025 has gone quickly! From tariff announcements in April to talks of AI bubbles now, it’s been a long and sometimes trying year in investment markets. But these events have also served to remind us of the core principles of sensible investing: to have a diversified portfolio, to keep behavioural biases in check, and to stay the course.

What can we learn from the year that was?

As we look to 2026, there are some key learnings we can take from 2025. We saw some surprises in the U.S. economy, which remained resilient despite rising import tariffs. A number of factors contributed to this, with many business absorbing the new costs rather than passing them on, which kept prices stable, even if they sacrificed some profits in the process.

However, despite a strong U.S. economy, the country’s equity markets left the pace-setting to others in 2025 (despite largely leading the way in prior years). The Korean market powered ahead, while emerging markets in general enjoyed higher returns. Even the U.K. posted higher returns than the U.S. This change in the year-to-date positions serves as a valuable reminder that the starting point for any asset, and its prevailing price point and valuation, are all-important.

What can we expect in 2026?

Our investment manager, Morningstar, notes that this calm might not continue, and expects tariff effects to continue showing up in 2026, stalling growth and lifting prices. However, they also expect that the AI boom will likely offset some of these effects, particularly as its capabilities become more common and widely used across a range of applications in businesses.

This year also saw some unusually high gains, so for next year, Morningstar anticipates a return to more modest returns. They’re also cautious about companies spending a lot of money on AI, and are seeing better value in markets like the U.K. and Brazil in sectors such as healthcare and consumer staples.

What should you do to prepare?

It bears repeating, but the best thing you can do is nothing. Staying invested is one of the most effective weapons in the investors’ arsenal, and Morningstar’s portfolios are built to withstand turbulent conditions. If you have any questions about your portfolio, please don’t hesitate to get in touch.  

Regards,

Adviser

Since its original publication, this piece may have been edited to reflect the regulatory requirements of regions outside of the country it was originally published in. This document is issued by Morningstar Investment Management Australia Limited (ABN 54 071 808 501, AFS Licence No. 228986) (‘Morningstar’). Morningstar is the Responsible Entity and issuer of interests in the Morningstar investment funds referred to in this report. © Copyright of this document is owned by Morningstar and any related bodies corporate that are involved in the document’s creation. As such the document, or any part of it, should not be copied, reproduced, scanned or embodied in any other document or distributed to another party without the prior written consent of Morningstar. The information provided is for general use only. In compiling this document, Morningstar has relied on information and data supplied by third parties including information providers (such as Standard and Poor’s, MSCI, Barclays, FTSE). Whilst all reasonable care has been taken to ensure the accuracy of information provided, neither Morningstar nor its third parties accept responsibility for any inaccuracy or for investment decisions or any other actions taken by any person on the basis or context of the information included. Past performance is not a reliable indicator of future performance. Morningstar does not guarantee the performance of any investment or the return of capital. Morningstar warns that (a) Morningstar has not considered any individual person’s objectives, financial situation or particular needs, and (b) individuals should seek advice and consider whether the advice is appropriate in light of their goals, objectives and current situation. Refer to our Financial Services Guide (FSG) for more information at morningstarinvestments.com.au/fsg.  Before making any decision about whether to invest in a financial product, individuals should obtain and consider the disclosure document. For a copy of the relevant disclosure document, please contact our Adviser Solutions Team on 02 9276 4550.