January 2025: a great start to the year

• 2025 started well
• Inflation rates dominate markets
• US economy continues to grow
• Thrilling stock market year ahead

2025 started well

The first few weeks of 2025 are behind us. The year started turbulently with higher-than-expected inflation figures, interest rate cuts, geopolitical tensions and the first corporate results for the past quarter. Nevertheless, the Peaks portfolios achieved positive returns: from +0.9% for Cautious to +2.5% for Adventurous.

The risk of the Peaks portfolios (measured by the extent to which prices move up-and-down) has increased somewhat compared to the end of last year. Compared to historical figures, however, it's still relatively low.

So overall, 2025 has started very well! 

Table 1: Net returns of Peaks portfolios

Important to know:

These net returns reflect Peaks portfolios in January 2025, all of 2025, and since the launch of Peaks, after deducting Peaks, fund, and transaction fees. The value of investments can fluctuate, and past performance is no guarantee of future results.

The above figures assume a portfolio value of €10,000 without any deposits or withdrawals. If you made deposits or withdrawals this month, your personal return may differ. Your return will also vary if you have invested less or more than €10,000 due to the monthly fees Peaks charges.

Table 2: Risk of Peaks portfolios

Important to know:

This table shows the risk levels of the four Peaks portfolios over different time periods (last month, this year, and the average since Peaks launched). Risk, also known as volatility, reflects the variation in annualised returns and is measured using the standard deviation of daily net returns converted to an annual basis.

Inflation rates dominate markets

Inflation indicates how fast prices rise: ‘high inflation’ means that prices rise faster. Central banks, instead, aim for low inflation, with prices remaining stable or rising only slightly. Inflation has been high in recent years, due to high gas and food prices caused by the war in Ukraine. To bring inflation down, the European Central Bank (ECB) and the US central bank (the Federal Reserve or ‘FED’)' raised interest rates.

Since then, inflation has fallen and central banks have cut interest rates, which is good for economic growth and the value of stocks and bonds. Investors are therefore hoping that central banks will cut interest rates further this year. On 30 January, the ECB lowered interest rates by 0.25 percentage points, to 2.75%, to support the faltering European economy. That gave European stocks a boost. Interest rates on the Peaks Interest Account also went down by 0.25 percentage points due to the ECB's decision.

The question now is whether interest rates will go down further. This is a hot topic among investors as it has a lot of impact on stock markets. Economic data suggest it may well take longer than expected. Indeed, US inflation came in slightly higher than expected in January, at 2.9% year-on-year (up from 2.7% in December). And slightly higher again in February, at 3.0% year-on-year. Eurozone inflation also went up in January, from 2.4% to 2.5%. February's figures are not yet available.

The US economy continues to grow

In the US, the economy continues to grow. In January, the unemployment rate fell further to 4.0% and producer confidence rose sharply. This gave investors confidence in the future. There were also concerns, however, about the new import tariffs announced by the US government. These caused tensions in stock markets, as higher tariffs aren't good for economic growth. Many companies suffer because they buy components for their products abroad and cannot simply switch suppliers or relocate factories. They are also often unable to fully pass on import tariffs to their customers (by raising prices).

As a result, companies' profit margin goes down and with it their value. This was one of the reasons why US stock market returns lagged behind those of European and Asian stocks in January.

Table 3: Net returns of index funds in standard Peaks portfolios

Important to know:

These net returns reflect the performance of index funds in January 2025, all of 2025, and since Peaks launched, after deducting Peaks, fund, and transaction fees. The value of investments can fluctuate, and past performance is no guarantee of future results.

Thrilling stock market year ahead

Due to the interest rate cut in Europe and the strong US economy, the stock market remained generally positive in January. Nobody knows what will happen in the coming months, but it is certainly tense: how will inflation develop? What will happen geopolitically now that Donald Trump is in power? For now, investors seem hopeful. In any case, remember that whatever happens, history shows that stock markets rise in value in the long run.