Performance Commentary

Highlights

• Portfolios overweight large cap U.S. stocks topped one-year results.
• A large cap U.S. tilt paired with municipal bonds propelled three-year leaders Fidelity Go, SoFi, and Wealthfront.
• The same mix kept Fidelity Go, Wealthfront, and Zacks Advantage ahead over seven years.
• International developed equities outpaced U.S. stocks in Q1, yet a domestic focus remains a performance driver longer term.

Backdrop

The S&P 500 Index declined 4.3% in the first quarter of 2025, the largest quarterly decline since the third quarter of 2022. The Index’s lackluster start to 2025 after consecutive years of outperformance was driven by a mix of headwinds to economic growth and policy uncertainty. In domestic markets, value stocks outperformed growth stocks, posting a gain for the quarter. Small capitalization stocks underperformed their large capitalization counterparts. Quarterly market movements were influenced by shifts in policy associated with the new presidential administration, which took office on January 20, 2025. February was particularly volatile as markets adjusted to policy uncertainties, alongside softening economic data throughout the quarter. Tariffs and government spending cuts dominated the domestic headlines while geopolitical uncertainty resulted in strong investor demand for international equities. The Federal Reserve Open Market Committee (FOMC) held interest rates unchanged at both of its meetings, finishing the quarter with a federal funds target rate range of 4.25% – 4.50%. The U.S. Economy remained resilient, even in the wake of the short-term volatility. Corporate earnings were strong, though analysts have begun to re-rate forecasts a bit due to tariffs.

International equities outperformed domestic equities in the first quarter of 2025. The MSCI EAFE Index gained 7.03% in the quarter, while the MSCI Emerging Markets Index returned 2.97%. Europe saw a strong equity rally following Germany’s relaxation of debt rules to fuel defense spending, and the fiscal spending driving rearmament of Europe resulted in strong quarterly outperformance versus the world.

In fixed-income markets, a key development in the first quarter was the ongoing normalization of the yield curve. Short-term yields continued their downward trajectory, contributing to a notable outperformance of Treasuries relative to equities as investors sought stability amid market volatility. The 10-year Treasury yield fell by over 0.30% in the period from 4.57% up to 4.23%. In a positive quarter for bonds across the board, high-yield corporates slightly outperformed their investment-grade counterparts.

Large‑Cap Tilt and Short‑Duration Credit Drive One‑Year Performance for SigFig, Betterment Climate Impact SRI, and Stash

SigFig, Betterment Climate Impact SRI, and Stash finished the past twelve months at the top of the robo advisor performance rankings. Each portfolio leaned heavily into large-cap, growth-oriented U.S. equities while keeping bond duration short and credit exposure selective. Those choices proved decisive in a year when mega-cap dominance and resilient consumer spending offset a softer economic backdrop.

Large caps again outpaced small caps. The Russell 1000 Index gained 7.80%, whereas the Russell 2000 Index fell 4.02%. Betterment Climate Impact SRI devoted 83% of its equity sleeve to large-cap stocks, well above the peer average near 69%. SigFig and Stash both held 74%, benefiting from outperformance of large cap equities.

Growth stocks retained a narrow lead over value. The Russell 3000 Growth Index gained 7.17%, slightly outperforming the Russell 3000 Value Index’s 6.64% return. Betterment Climate Impact SRI allocated 30% to growth, SigFig 29%, and Stash 28%, all several percentage points above the typical robo weight. Their above-average exposure to technology and communication services benefited from strong investor enthusiasm around artificial intelligence, contributing to performance.