Written by Millan Chauhan
Last week, the Federal Reserve implemented a 0.25% interest rate cut, marking its first move in nine months. This decision was a response to mounting evidence of a slowing labour market in the US. Chair Jerome Powell acknowledged that the balance of risks has shifted toward employment concerns and away from inflation, which has remained persistently above the Federal Reserve’s 2.0% target. The central bank also signalled expectations for two additional 0.25% rate cuts before the end of the year. This boosted equity markets, with the S&P 500 up +1.8% last week. Global equities, as measured by the MSCI All Country World Index, also rallied +1.6% for the week, with the US representing roughly 65% of that index, being a key driver.
The resumption of rate cuts has particularly benefited US small-cap companies, which have outperformed their large-cap counterparts in recent months. Anticipation of further interest rate cuts into 2025 and 2026 has propelled the small and mid-cap biased Russell 2000 index to a +14.7% gain for the quarter so far, including a +2.8% return last week. As a reminder, the YOU Multi-Asset Blends Fund and Active Model Portfolios have an exposure to an actively managed Fund managed by Neuberger Berman, which has effectively captured this small-cap outperformance.
In Asia, China’s internet regulator announced an immediate ban on major technology firms purchasing US chip maker Nvidia’s AI chips, reflecting ongoing US-China tensions. China continues to reduce reliance on Nvidia and has accelerated its domestic chip development. There is a growing consensus that Chinese manufacturers can now match the performance of Nvidia’s China-specific RTX Pro 6000D chip. This development marks another chapter in the ongoing US-China rivalry, with the current focus squarely on AI leadership. Chinese equities extended their strong recent performance, with the MSCI China index up +1.5% last week, contributing to a +1.8% gain for the MSCI Emerging Markets index.
As the race for AI dominance intensifies, Nvidia announced a $5 billion stake in Intel, with the intent to diversify its chips production reliance away from Taiwan Semiconductor Manufacturing Company (TSMC). Intel, which has faced competitive challenges, is also set to receive a 10% equity investment from the US federal government to help reinforce their leadership in semiconductors and technology.
Diversification remains a cornerstone of our investment philosophy. We are committed to maintaining broad exposure across and within asset classes, ensuring portfolios are not overly concentrated in any single theme or region. While technology has been a prominent driver of recent performance, our portfolios are constructed to benefit from a range of investment styles and factors, supporting robust overall returns.
All performance figures are stated in Sterling terms, unless otherwise specified.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 22nd September 2025.
© 2025 YOU Asset Management. All rights reserved.
