There were exceptions, but they required investors to accept very different risks. One of the most striking came from Dimensional Fund Advisors LP, whose $14 billion International Small Cap Value Portfolio returned just over 50% this year, outpacing not only its benchmark but also the S&P 500 and the Nasdaq 100.
The structure of that portfolio is telling. It holds roughly 1,800 stocks, almost all outside the US, with heavy exposure to financials, industrials and materials. Rather than trying to navigate around the US large-cap index, it largely stepped outside it.
“This year provides a really good lesson,” said Joel Schneider, the firm’s deputy head of portfolio management for North America. “Everyone knows that global diversification makes sense, but it’s really hard to stay disciplined and actually maintain that. Choosing yesterday’s winners is not the right approach.”
Sticking With Winners
One manager who stuck with her convictions was Margie Patel of the Allspring Diversified Capital Builder Fund, which has returned some 20% this year thanks to bets on chipmakers Micron Technology Inc. and Advanced Micro Devices Inc.
“A lot of people like to be closet or quasi indexers. They like to have some exposure in all sectors even if they’re not convinced that they are going to outperform,” Patel said on Bloomberg TV. In contrast, her view is that “the winners are going to stay winners.”
The propensity of big stocks to get bigger made 2025 a banner year for would-be bubble hunters. The Nasdaq 100 trades at more than 30 times earnings and around six times sales, at or near historical highs. Dan Ives, the Wedbush Securities analyst who started an AI-focused ETF (IVES) in 2025 and saw it swell to nearly $1 billion, says valuations like those may test nerves, but are no reason to bail on the theme.
“There are going to be white-knuckle moments. That just creates the opportunities,” he said in an interview. “We believe this tech bull market goes for another two years. To us, it’s about trying to find who the derivative beneficiaries are, and that’s how we’re going to continue to navigate this fourth industrial revolution from an investing perspective.”
Thematic Investing
Other successes leaned into concentration of a different kind. VanEck’s Global Resources Fund returned almost 40% this year, benefiting from demand linked to alternative energy, agriculture and base metals. The fund, launched in 2006, owns companies such as Shell Plc, Exxon Mobil Corp. and Barrick Mining Corp., and is run by teams that include geologists and engineers alongside financial analysts.
“When you are an active manager, it allows you to pursue big themes,” said Shawn Reynolds, who has managed the fund for 15 years, a geologist himself. But that approach, too, demands conviction and tolerance for volatility — qualities that many investors have shown less appetite for after several years of uneven results.
