Wide gains, narrow losses

The Bloomberg Global Aggregate, the world's leading investment grade index, rose by 8.2%. The MSCI World Index rose by 18.9%. And yes, some commodities, like gold and copper, rose by twice or thrice as much. Not that I had recommended investing in gold or copper, but hey – I probably never will.

If the stock market typically climbs a wall of worry, last year demonstrated that it may also climb a wall of adversity as it unfolds – like erratic tariff shocks, the US government shutdown, subdued global growth, escalating wars, rising US government debt, and fears of an AI bubble.

Just a quick reality check: If you knew what was going to happen in 2025, would you have expected a total return of almost 19%?

Now, most adverse events have a positive side to them. The US tariff announcements sped up imports to the US, from consumer goods to copper, in an attempt to pre-empt the very same tariffs. This stockpiling was generally conducive to growth. Concern about the US economy led US market interest rates to fall, especially at the short end, while concern about the Ukraine war led Germany in particular to accept a more expansionary fiscal policy. The stock market certainly took notice, as the European stock market now did somewhat better than the US stock market, despite rising market rates in Europe.

There was only one exception to the generally rosy picture: Nordic stocks had a rather lacklustre year, with the MSCI Nordic Countries index rising by only 6.0% and the OMX Nordic 40 barely posting a positive return. The main culprit, of course, was the heavyweight Novo Nordisk, with an MSCI weight of just under 11%. This stock alone fell by more than 46%, contributing to a decline of 21.6% in the OMX Copenhagen 20 – according to Nasdaq the leading index in Denmark.

As it happens, Denmark has a bit of a health/pharma cluster. Of the (surprise) 20 companies in this index, six are in health/pharma – and all of them fell in 2025. That tells us very little about these specific companies, which may be wonderful businesses (we know some of them are). It does, however, serve as a stark reminder of something that’s been discussed in a very different context: concentration risk.

In 2025, it never materialised for investors in the tech-heavy and AI-dependent US “Magnificent Seven”. For investors with a broad exposure to this Danish index, however, 2025 offered a real life, really expensive example of concentration risk. For most other investors in stocks as well as bonds, it was a most profitable year – although the weaker dollar made much of the Wall Street profits disappear on this side of the Atlantic.

On the other hand, though, this was beneficial to a lot of US exporting companies. Again, most adverse events have a positive side to them. 2025 had a lot.

Historical returns are no guarantee for future returns. Future returns will depend, inter alia, on, market developments, the portfolio manager’s skill, the fund’s risk profile, as well as fees for subscription, management and redemption. Returns may become negative as a result of negative price developments. This is marketing communication.