Indexology^® Blog

For many years, global issuers have gravitated toward the U.S. dollar bond market, drawn by its unparalleled liquidity, vast investor base and efficient access to funding. However, recent developments in the U.S. yield environment are beginning to shift perspectives on the U.S. Treasury market’s long-held reputation as the world financial safe haven. In response, market participants are increasingly turning to other regions, including the euro and sterling bond markets, which are gaining traction as alternatives for market participants seeking stability and value in today’s shifting landscape.

The euro-denominated government and corporate bond markets, anchored by the relative stability and scale of the eurozone, continue to offer robust liquidity and diversification opportunities. Similarly, the U.K.’s sterling bond market, supported by its long-standing reputation for transparency and regulatory strength, is drawing renewed interest amid global volatility. This is due to the relative value and resilience found within these European markets, with both GBP and EUR bonds providing options for those seeking to navigate the evolving global fixed income landscape. This shift in focus underscores the growing importance of European currencies in global portfolios, as market participants seek to balance risk and performance in an environment marked by fiscal uncertainty in the U.S.

During the period from April 1, 2025, to Aug. 28, 2025, U.S. Treasuries (as represented by the iBoxx $ Treasuries) saw a modest performance, posting a return of 1.13%. In comparison, the iBoxx Global Government EMEA Index, which represents sovereign bond issues by central governments in the EMEA, recorded a gain of 1.66% for the same timeframe (see Exhibit 1), in USD-hedged terms. Individual sovereign indices covering German, French, Italian and British sovereign bonds also registered positive performance in USD-hedged terms. The iBoxx Global Government Italy rose by 2.04%, while the iBoxx Global Government Germany increased by 0.35% when compared to U.S. Treasuries.

Performance dynamics shift when accounting for the EUR-USD and GBP-USD exchange rates, as reflected in USD unhedged indices. Over the period, the iBoxx Global Government EMEA index outperformed the iBoxx $ Treasuries by 7.82% (see Exhibit 2). Additionally, when examining individual sovereign markets in USD unhedged terms, several of them posted notably higher returns compared to U.S. Treasuries. German sovereign bonds increased 7.29%, while Italian sovereign bonds gained 9.20% over the same period.

Shifting Correlations and Improved Diversification

The correlation data highlights a notable divergence between six-month (April 2025-August 2025) and 10-year relationships among U.S. Treasuries and major European sovereign bond markets. Over the April 2025-August 2025 period, correlations with U.S. Treasuries were significantly lower than their respective 10-year averages. For example, Germany and France, which both show strong 10-year correlations of 89% with U.S. Treasuries, had much weaker short-term correlations of 37% and 36%, respectively. Italy and the U.K. also display this pattern, with 10-year correlations of 74% and 76% that dropped to 45% and 31% in the recent period, respectively. The broader EMEA index follows suit, with a 10-year correlation of 62% but only 44% for the six-month period. This suggests that while U.S. and European government bonds had historically moved closely together, recent market conditions have led to greater differentiation and reduced co-movement, reflecting shifting investor sentiment and regional economic factors.

If sustained, the recent decline in correlation between U.S. Treasuries and European sovereign bonds highlights the potential for new diversification opportunities. Strong unhedged returns in EUR and GBP markets, especially Italian and German bonds, suggest growing investor interest. If U.S. fiscal uncertainty persists, European bonds might be an interesting alternative for investors looking for global diversification.

Explore a powerful new tool designed to help users create customized indices quickly and intuitively via S&P DJI’s SPICE platform. 

Since its launch in 2021, the S&P/BMV IPC CompMx Trailing Income Equities ESG Tilted Index has outperformed the S&P/BMV IPC, Mexico’s broad equity benchmark, by a cumulative 1.33% (see Exhibit 1). Additionally, the index achieved a higher S&P Global ESG Score of 60 compared to the S&P/BMV IPC’s score of 57. However, as of Aug. 31, 2025, the index faced a YTD underperformance of 5.47% relative to the S&P/BMV IPC.

In our previous analysis, we explored the historical outperformance of the index, highlighting its calendar year returns. In this sequel analysis, we aim to assess the reasons behind the YTD underperformance through a sectoral performance attribution analysis against the S&P/BMV IPC.

The results of this analysis revealed that the primary driver behind the S&P/BMV IPC CompMx Trailing Income Equities ESG Tilted Index’s underperformance was a significant underweight of 8.61% in the Materials sector. This underweight was particularly impactful, as the Materials sector achieved a cumulative performance of 39.02%, outperforming the S&P/BMV IPC by 17.39%, as illustrated in Exhibit 2. The underweight in this sector detracted from the index’s relative performance by 3.41%.

A closer look revealed that this underweight in Materials was inherited from the S&P/BMV IPC CompMx Trailing Income Equities Index, the index’s underlying benchmark, which similarly reflected a notable underweight in this sector of 10.16% relative to the S&P/BMV IPC.

In summary, the results of our analysis indicate that the YTD underperformance of the S&P/BMV IPC CompMx Trailing Income Equities ESG Tilted Index against the S&P/BMV IPC can primarily be attributed to its considerable underweight in the Materials sector. As we continue to monitor this index, market participants may want to take into account the historical data presented in Exhibit 1 and the inherent sectoral weights highlighted in Exhibit 2 to make informed decisions.

The investment landscape is undergoing a marked transformation as the private markets space has generated increasing interest among new classes of investors. This shift reflects a broader rethinking of diversification, return potential and portfolio construction strategies. As interest in private equity and private credit continues to expand, S&P Dow Jones Indices (S&P DJI) is positioned to support this growing demand through innovative index-based solutions that promote transparency, efficiency and accessibility.

Retail Investors: Unlocking Access to Private Markets

Private markets—which include private equity, private credit and others—have historically been the domain of institutional investors. Today, retail investors are rapidly gaining interest—U.S. retail fundraising in alternative investments reached USD 122 billion in 2025, and a State Street survey reported that 56% of institutional investors expect retail-style vehicles to account for over half of private market fund flows by 2027.²

Private markets currently represent roughly 10%-15% of global assets, and retail investor allocations remain well below that range in the U.S.,³ even though U.S. households controlled an estimated USD 90 trillion in total financial wealth by the end of 2024.⁴

Within this wealth pool, the mass-affluent segment (generally defined as USD 500,000-USD 2 million in investable assets) and the affluent group (USD 2 million-USD 5 million) together account for 36% of U.S. households. While these segments play a significant role in overall wealth distribution, their allocation weight in private markets remains disproportionately low—highlighting the potential for growth by better aligning their substantial investable assets with emerging private market strategies.⁴

However, there are some barriers. Retail investors face high minimums, illiquidity, limited secondary markets, opaque fee structures and a lack of transparency. These longstanding obstacles have hindered broader participation—until now. The push toward democratizing access to private markets is gathering momentum.

S&P DJI is developing solutions to help bridge this gap. Through the development of index-based solutions that are transparent, cost-effective and scalable, S&P DJI is working to address these concerns associated with private assets, and to provide detailed insights and robust performance evaluation tools in the private equity and credit strategy space.

Institutional Investors: Rethinking Portfolio Construction with Alternatives

For institutional investors, private market investments are no longer considered peripheral, taking on an increasingly central role in portfolio strategy. Global pension funds are making substantial allocations to private markets, now totaling more than USD 10 trillion.⁵ In many cases, alternatives account for over 25% of institutional portfolios.

Institutions are increasingly drawn to private markets for their return potential, diversification benefits and relative resilience in volatile public market environments. However, challenges remain: limited transparency, illiquidity and single-manager risk still shape decision-making.

As a result, institutional investors could be turning to index-based private markets solutions that can offer:

• Cost-efficient implementation;
• Fast and scaled deployment of alternatives;
• Greater transparency and benchmark comparability; and
• Diversification with less manager concentration risk.

By leveraging index-based solutions, institutions aim to strike a balance between the potential benefits of private market participation while mitigating the traditional constraints associated with these investments. At the same time, it is important to acknowledge that investing in private markets will differ from public markets, and that retaining these unique characteristics is part of the value proposition. Education will also play a critical role in helping investors understand the nature of private markets and how index-based approaches can enhance transparency.

Innovating Participation and Transparency in Private Markets

As a global leader in indexing, S&P DJI is playing a central role in reshaping tools that enable participation in private markets for both retail and institutional investors. S&P DJI’s role in private markets starts with our collaboration with Cambridge Associates, providing industry-standard benchmarks for private fund performance. We also publish indices that are designed to measure listed private equity and business development companies. Earlier this year, we introduced the S&P U.S. Private Stock Top 10 Index—our first step into indices with the objective of measuring late-stage venture-backed companies—reflecting the increasing availability of pricing data in this space. More recently, we launched the S&P Private Equity 50 Indices, which are designed to measure the performance of 50 of the largest available private equity funds for a year. The indices aim to provide market participants with an efficient and accessible view into leading North American and European private equity funds. The indices include:

• S&P Private Equity 50 2023 (Reserve – S&P 500) Index
• S&P Private Equity 50 2024 (Reserve – S&P 500) Index
• S&P Private Equity 50 2023 (Reserve – SOFR) Index
• S&P Private Equity 50 2024 (Reserve – SOFR) Index

As part of S&P Global, we continue to draw on enterprise-wide expertise and data to develop solutions across private equity, private credit and other evolving areas of private markets. These efforts are designed to increase transparency, lower barriers to entry and provide a consistent, data-driven framework for evaluating the performance of private markets.

With decades of expertise and deep relationships with a range of market participants across the ecosystem, S&P DJI is uniquely positioned to deliver index solutions that meet the evolving interests of both institutions and retail investors. By driving innovation in index design and creating trusted benchmarks for private markets, S&P DJI is helping to provide detailed insights and robust performance evaluation tools, enhance transparency and shape the future of private markets for the next generation.

1. Habbel, Markus et al. “Avoiding Wipeout: How to Ride the Wave of Private Markets.” Bain & Company. August 2024.
2. The “Retail Revolution” Will Drive 50%+ of Private Market Flows by 2027 – State Street Private Markets Survey | State Street Bank and Trust Company
3. Skolnik, Or et al. “Why Private Equity Is Targeting Individual Investors.” Bain & Company. 2023.
4. Household Wealth Surged 16% in 2024 on Stock Gains: Cerulli
5. “Global Pension Assets Hit Record High in 2024.” and “US Public Pension Funds Increased Allocations to Fixed Income in 2024.” Banking Exchange. Feb. 11, 2025, and March 4, 2025.

Style indices have behaved differently internationally and in the U.S. This year, U.S. growth stocks, represented by the S&P United States BMI Growth (up 14.8% as of the end of September 2025), outperformed the broader U.S. market (up 14.4%). Outside the U.S., the S&P Global Ex-U.S. BMI Value (up 30.7%) has performed better (see Exhibit 1). What can we learn about this?

First, how are value and growth defined for the S&P Global BMI Series? As per the Global BMI methodology, stocks are classified based on a growth-to-value score ratio. The scores are calculated using four standardized financial metrics for value and three for growth (see Exhibit 2). In short, value focuses on undervalued stocks, while growth cares more about potential.

This year’s dominance of growth in the U.S. is a story of two words: artificial intelligence. Generally, growth indices tend to be skewed to the Information Technology and Communication Services GICS^® sectors. As of the end of September, the weight of IT in the S&P United States BMI Growth was 45.9% (see Exhibit 3). As the AI rally has continued this year, it is common that an index with a high weight in these stocks rises. Internationally, the S&P Global Ex-U.S. BMI Growth (up 24.9%) performance was also mainly attributed to IT stocks.

While growth slightly outperformed value in the U.S., internationally, the differential of value over growth was higher as market participants increasingly looked for undervalued stocks.

The S&P Global Ex-U.S. BMI Value ended 2024 below its 10-year average P/E ratio (see Exhibit 4), though it did end September slightly above its 10-year average. This index tends to be heavy on Financials and Industrials (see Exhibit 5), with the former benefiting from strong bank earnings, lowering interest rates and resilient economic activity, and the latter by increased defense spending, especially in Europe.

However, this dynamic doesn’t necessarily always hold. Since 2020, U.S. growth mostly outperformed the broader U.S. market, and value performed better internationally, but Exhibit 6 shows that style rotation has happened. Economic cycles, valuation disparity and investor sentiment play an important role in the dominance of one style over the other.

The performance of style strategies has not always been the same across regions. This year, specific conditions have led to growth’s outperformance in the U.S. and value’s outperformance internationally. Style dominance trends go ’round and ’round before fading into view again. Only time can tell which remains—for now.